Is Kennedy-Wilson Holdings Inc (KW) A Good Stock To Buy?

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Kennedy-Wilson Holdings Inc (NYSE:KW) based on that data.

Is Kennedy-Wilson Holdings Inc (NYSE:KW) a buy here? The best stock pickers are turning bullish. The number of long hedge fund bets went up by 1 in recent months. Our calculations also showed that kw isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Prem Watsa, Fairfax Financial Holdings

We’re going to take a peek at the fresh hedge fund action encompassing Kennedy-Wilson Holdings Inc (NYSE:KW).

How have hedgies been trading Kennedy-Wilson Holdings Inc (NYSE:KW)?

At the end of the fourth quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in KW over the last 14 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds With KW Positions

More specifically, Fairfax Financial Holdings was the largest shareholder of Kennedy-Wilson Holdings Inc (NYSE:KW), with a stake worth $242.1 million reported as of the end of September. Trailing Fairfax Financial Holdings was Elkhorn Partners, which amassed a stake valued at $80.2 million. Royce & Associates, ACK Asset Management, and Sprott Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.

Now, key money managers have been driving this bullishness. GLG Partners, managed by Noam Gottesman, created the most outsized position in Kennedy-Wilson Holdings Inc (NYSE:KW). GLG Partners had $4.1 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also made a $0.8 million investment in the stock during the quarter. The other funds with brand new KW positions are D. E. Shaw’s D E Shaw and Dmitry Balyasny’s Balyasny Asset Management.

Let’s also examine hedge fund activity in other stocks similar to Kennedy-Wilson Holdings Inc (NYSE:KW). We will take a look at Liberty Latin America Ltd. (NASDAQ:LILA), Ardagh Group S.A. (NYSE:ARD), Chemical Financial Corporation (NASDAQ:CHFC), and Silgan Holdings Inc. (NASDAQ:SLGN). This group of stocks’ market caps are closest to KW’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LILA 13 129644 2
ARD 10 41540 2
CHFC 10 36182 2
SLGN 14 108007 2
Average 11.75 78843 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $79 million. That figure was $428 million in KW’s case. Silgan Holdings Inc. (NASDAQ:SLGN) is the most popular stock in this table. On the other hand Ardagh Group S.A. (NYSE:ARD) is the least popular one with only 10 bullish hedge fund positions. Kennedy-Wilson Holdings Inc (NYSE:KW) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on KW, though not to the same extent, as the stock returned 18.8% and outperformed the market as well.

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