Is Kimball Electronics Inc (KE) A Good Stock To Buy?

We at Insider Monkey have gone over 730 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 June 28th. In this article, we look at what those funds think of Kimball Electronics Inc (NASDAQ:KE) based on that data.

Kimball Electronics Inc (NASDAQ:KE) was in 9 hedge funds’ portfolios at the end of the second quarter of 2019. KE shareholders have witnessed a decrease in enthusiasm from smart money lately. There were 10 hedge funds in our database with KE positions at the end of the previous quarter. Our calculations also showed that KE isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Chuck Royce

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the key hedge fund action encompassing Kimball Electronics Inc (NASDAQ:KE).

What does smart money think about Kimball Electronics Inc (NASDAQ:KE)?

Heading into the third quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in KE a year ago. 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 KE Positions

Among these funds, Royce & Associates held the most valuable stake in Kimball Electronics Inc (NASDAQ:KE), which was worth $8.3 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $7.8 million worth of shares. Moreover, Ancora Advisors, D E Shaw, and Millennium Management were also bullish on Kimball Electronics Inc (NASDAQ:KE), allocating a large percentage of their portfolios to this stock.

Since Kimball Electronics Inc (NASDAQ:KE) has faced falling interest from the smart money, we can see that there is a sect of hedgies that slashed their positions entirely heading into Q3. Interestingly, Austin Wiggins Hopper’s AWH Capital dropped the biggest stake of the 750 funds monitored by Insider Monkey, valued at about $0.4 million in stock, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital was right behind this move, as the fund sold off about $0 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds heading into Q3.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Kimball Electronics Inc (NASDAQ:KE) but similarly valued. We will take a look at Willdan Group, Inc. (NASDAQ:WLDN), Fidus Investment Corporation (NASDAQ:FDUS), PhaseBio Pharmaceuticals, Inc. (NASDAQ:PHAS), and Golden Entertainment Inc (NASDAQ:GDEN). This group of stocks’ market valuations resemble KE’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WLDN 5 9498 -1
FDUS 5 11178 -3
PHAS 8 58573 4
GDEN 11 79189 -1
Average 7.25 39610 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $25 million in KE’s case. Golden Entertainment Inc (NASDAQ:GDEN) is the most popular stock in this table. On the other hand Willdan Group, Inc. (NASDAQ:WLDN) is the least popular one with only 5 bullish hedge fund positions. Kimball Electronics Inc (NASDAQ:KE) is not the most popular stock in this group but hedge fund interest is still above average. 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately KE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on KE were disappointed as the stock returned -10.7% during the third quarter 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.

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