At Insider Monkey we follow around 740 of the top investors and even though many of them underperformed the raging bull market, the history teaches us that over the long-run they still manage to beat the market after adjusting for risk, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following their best picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.
KB Financial Group, Inc. (ADR) (NYSE:KB) has experienced an increase in enthusiasm from smart money in recent months. KB was in 9 hedge funds’ portfolios at the end of the third quarter of 2016. There were 6 hedge funds in our database with KB holdings at the end of the second quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Citizens Financial Group Inc (NYSE:CFG), Invesco Ltd. (NYSE:IVZ), and Waters Corporation (NYSE:WAT) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
How are hedge funds trading KB Financial Group, Inc. (ADR) (NYSE:KB)?
Heading into the fourth quarter of 2016, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a 50% jump from the second quarter of 2016. By comparison, 8 hedge funds held shares or bullish call options in KB heading into this year, though hedge fund ownership is down by 1 since the end of Q3 2015. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, William B. Gray of Orbis Investment Management holds the largest position in KB Financial Group, Inc. (ADR) (NYSE:KB). Orbis Investment Management has a $14.2 million position in the stock. The second largest stake is held by Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, holding a $7.9 million position. Remaining members of the smart money that hold long positions include Ken Fisher’s Fisher Asset Management, D E Shaw, one of the biggest hedge funds in the world, and Jane Mendillo’s Harvard Management Co. We should note that Orbis Investment Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-micro-cap stocks.
Consequently, some big names were leading the bulls’ herd. Sensato Capital Management, led by Ernest Chow and Jonathan Howe, created the most outsized position in KB Financial Group, Inc. (ADR) (NYSE:KB). Sensato Capital Management had $0.9 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0.4 million position during the quarter. The only other fund with a new position in the stock was Louis Navellier’s Navellier & Associates.
Let’s now take a look at hedge fund activity in other stocks similar to KB Financial Group, Inc. (ADR) (NYSE:KB). These stocks are Citizens Financial Group Inc (NYSE:CFG), Invesco Ltd. (NYSE:IVZ), Waters Corporation (NYSE:WAT), and Cimarex Energy Co (NYSE:XEC). This group of stocks’ market valuations are similar to KB’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $944 million. That figure was just $34 million in KB’s case. Citizens Financial Group Inc (NYSE:CFG) is the most popular stock in this table. On the other hand Invesco Ltd. (NYSE:IVZ) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks KB Financial Group, Inc. (ADR) (NYSE:KB) is even less popular than IVZ. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock.