Is Kamada (KMDA) A Good Stock To Buy Now?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Kamada Ltd (NASDAQ:KMDA), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Kamada (KMDA) a good stock to buy now? KMDA was in 6 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 4. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. KMDA has experienced an increase in enthusiasm from smart money recently. There were 2 hedge funds in our database with KMDA positions at the end of the second quarter. Our calculations also showed that KMDA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Gavin Saitowitz of Prelude Capital

Gavin Saitowitz of Prelude Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to take a look at the recent hedge fund action encompassing Kamada Ltd (NASDAQ:KMDA).

What does smart money think about Kamada Ltd (NASDAQ:KMDA)?

Heading into the fourth quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 200% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards KMDA over the last 21 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of Kamada Ltd (NASDAQ:KMDA), with a stake worth $9.7 million reported as of the end of September. Trailing Renaissance Technologies was Noked Capital, which amassed a stake valued at $1 million. Diametric Capital, Prelude Capital (previously Springbok Capital), and Marshall Wace LLP were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Diametric Capital allocated the biggest weight to Kamada Ltd (NASDAQ:KMDA), around 0.73% of its 13F portfolio. Noked Capital is also relatively very bullish on the stock, dishing out 0.68 percent of its 13F equity portfolio to KMDA.

Consequently, key hedge funds were leading the bulls’ herd. Noked Capital, managed by Roy Vermus and Shlomi Bracha, assembled the biggest position in Kamada Ltd (NASDAQ:KMDA). Noked Capital had $1 million invested in the company at the end of the quarter. Nick Thakore’s Diametric Capital also initiated a $1 million position during the quarter. The following funds were also among the new KMDA investors: Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital) and Israel Englander’s Millennium Management.

Let’s check out hedge fund activity in other stocks similar to Kamada Ltd (NASDAQ:KMDA). These stocks are Valhi, Inc. (NYSE:VHI), WiMi Hologram Cloud Inc. (NASDAQ:WIMI), Wins Finance Holdings Inc. (NASDAQ:WINS), Tejon Ranch Company (NYSE:TRC), Vermilion Energy Inc (NYSE:VET), Lawson Products, Inc. (NASDAQ:LAWS), and Corvus Gold Inc. (NASDAQ:KOR). This group of stocks’ market valuations resemble KMDA’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VHI 3 3064 -1
WIMI 3 1363 1
WINS 1 510 0
TRC 13 51914 2
VET 6 8820 -2
LAWS 5 26245 -2
KOR 4 177014 4
Average 5 38419 0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $13 million in KMDA’s case. Tejon Ranch Company (NYSE:TRC) is the most popular stock in this table. On the other hand Wins Finance Holdings Inc. (NASDAQ:WINS) is the least popular one with only 1 bullish hedge fund positions. Kamada Ltd (NASDAQ:KMDA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KMDA is 59.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and beat the market again by 16.1 percentage points. Unfortunately KMDA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on KMDA were disappointed as the stock returned -18.7% since the end of September (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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Disclosure: None. This article was originally published at Insider Monkey.