Is KFRC A Good Stock To Buy Now?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Kforce Inc. (NASDAQ:KFRC).

Is KFRC a good stock to buy now? Kforce Inc. (NASDAQ:KFRC) has seen an increase in hedge fund interest of late. Kforce Inc. (NASDAQ:KFRC) was in 19 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 22. There were 16 hedge funds in our database with KFRC positions at the end of the second quarter. Our calculations also showed that KFRC 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a 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. Now let’s review the key hedge fund action encompassing Kforce Inc. (NASDAQ:KFRC).

Do Hedge Funds Think KFRC Is A Good Stock To Buy Now?

At third quarter’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in KFRC a year ago. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the number one position in Kforce Inc. (NASDAQ:KFRC). Royce & Associates has a $7.8 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $6.9 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions consist of Cliff Asness’s AQR Capital Management, Israel Englander’s Millennium Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Kforce Inc. (NASDAQ:KFRC), around 0.69% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.38 percent of its 13F equity portfolio to KFRC.

As industrywide interest jumped, key money managers have been driving this bullishness. Quantinno Capital, managed by Hoon Kim, created the largest position in Kforce Inc. (NASDAQ:KFRC). Quantinno Capital had $0.6 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $0.6 million position during the quarter. The following funds were also among the new KFRC investors: Donald Sussman’s Paloma Partners and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Kforce Inc. (NASDAQ:KFRC) but similarly valued. We will take a look at Everi Holdings Inc (NYSE:EVRI), Phibro Animal Health Corp (NASDAQ:PAHC), IMAX Corporation (NYSE:IMAX), Limelight Networks, Inc. (NASDAQ:LLNW), Hudson Ltd. (NYSE:HUD), Nexa Resources S.A. (NYSE:NEXA), and Cryolife Inc (NYSE:CRY). This group of stocks’ market valuations are similar to KFRC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EVRI 26 158471 3
PAHC 15 44143 0
IMAX 18 71718 -1
LLNW 17 74271 -7
HUD 16 83748 -5
NEXA 2 2468 -2
CRY 12 57875 1
Average 15.1 70385 -1.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $70 million. That figure was $49 million in KFRC’s case. Everi Holdings Inc (NYSE:EVRI) is the most popular stock in this table. On the other hand Nexa Resources S.A. (NYSE:NEXA) is the least popular one with only 2 bullish hedge fund positions. Kforce Inc. (NASDAQ:KFRC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KFRC is 69.3. 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. 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 December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on KFRC as the stock returned 31.4% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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