Is K12 Inc. (LRN) A Good Stock To Buy?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards K12 Inc. (NYSE:LRN).

Is K12 Inc. (NYSE:LRN) a safe investment right now? Prominent investors are in an optimistic mood. The number of bullish hedge fund bets went up by 1 recently. At the end of this article we will also compare LRN to other stocks including Computer Programs & Systems, Inc. (NASDAQ:CPSI), AngioDynamics, Inc. (NASDAQ:ANGO), and Chiasma Inc (NASDAQ:CHMA) to get a better sense of its popularity.

Keeping this in mind, let’s take a gander at the key action regarding K12 Inc. (NYSE:LRN).

What does the smart money think about K12 Inc. (NYSE:LRN)?

Heading into Q4, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, James Dondero’s Highland Capital Management has the biggest position in K12 Inc. (NYSE:LRN), worth close to $36.6 million, amounting to 1.1% of its total 13F portfolio. The second most bullish fund manager is D E Shaw, holding a $10.5 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism contain Israel Englander’s Millennium Management, Cliff Asness’s AQR Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.