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Is KeyCorp (KEY) A Good Stock To Buy?

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in fourth quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with technology among them. Nevertheless, most investors decided to stick to their bullish theses and recouped their losses by the end of the first quarter. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about KeyCorp (NYSE:KEY).

Is KeyCorp (NYSE:KEY) the right pick for your portfolio? Hedge funds are getting less bullish. The number of long hedge fund positions went down by 1 in recent months. Our calculations also showed that KEY isn’t among the 30 most popular stocks among hedge funds.

At the moment there are dozens of gauges shareholders have at their disposal to analyze publicly traded companies. Two of the less utilized gauges are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top money managers can beat the S&P 500 by a solid margin (see the details here).

Matthew Lindenbaum Basswood Capital

Let’s take a gander at the key hedge fund action encompassing KeyCorp (NYSE:KEY).

What does the smart money think about KeyCorp (NYSE:KEY)?

Heading into the second quarter of 2019, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from one quarter earlier. On the other hand, there were a total of 41 hedge funds with a bullish position in KEY a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

KEY_jun2019

Of the funds tracked by Insider Monkey, Ken Griffin’s Citadel Investment Group has the biggest position in KeyCorp (NYSE:KEY), worth close to $151.2 million, accounting for 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Pzena Investment Management, managed by Richard S. Pzena, which holds a $110 million position; 0.6% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions include Israel Englander’s Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Matthew Lindenbaum’s Basswood Capital.

Because KeyCorp (NYSE:KEY) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of money managers who sold off their full holdings by the end of the third quarter. It’s worth mentioning that Lee Ainslie’s Maverick Capital dropped the biggest position of all the hedgies monitored by Insider Monkey, worth close to $9.9 million in stock, and Anand Parekh’s Alyeska Investment Group was right behind this move, as the fund dumped about $9.7 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 1 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to KeyCorp (NYSE:KEY). We will take a look at SK Telecom Co., Ltd. (NYSE:SKM), BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), Magna International Inc. (NYSE:MGA), and Match Group, Inc. (NASDAQ:MTCH). All of these stocks’ market caps are similar to KEY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SKM 6 73101 0
BMRN 41 1908601 4
MGA 27 523999 5
MTCH 24 573647 0
Average 24.5 769837 2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $770 million. That figure was $497 million in KEY’s case. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (NYSE:SKM) is the least popular one with only 6 bullish hedge fund positions. KeyCorp (NYSE:KEY) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on KEY as the stock returned 4.6% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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

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