Is KLR A Good Stock To Buy Now?

We at Insider Monkey have gone over 817 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 September 30th. In this article, we look at what those funds think of Kaleyra, Inc. (NYSE:KLR) based on that data.

Is KLR a good stock to buy now? Hedge fund interest in Kaleyra, Inc. (NYSE:KLR) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that KLR 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). 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 Lightinthebox Holding Co Ltd (NYSE:LITB), Ideanomics, Inc. (NASDAQ:IDEX), and Southern Missouri Bancorp, Inc. (NASDAQ:SMBC) to gather more data points.

Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David Atterbury - Whetstone Capital

David Atterbury of Whetstone Capital Advisors

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 we’re going to view the latest hedge fund action encompassing Kaleyra, Inc. (NYSE:KLR).

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

Heading into the fourth quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 5 hedge funds held shares or bullish call options in KLR a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Millennium Management, managed by Israel Englander, holds the biggest position in Kaleyra, Inc. (NYSE:KLR). Millennium Management has a $28.7 million call position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is David Atterbury of Whetstone Capital Advisors, with a $8.2 million position; 1.5% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions contain Chuck Royce’s Royce & Associates, Thomas Ellis and Todd Hammer’s North Run Capital and Scott Stewart Miller’s Greenhaven Road Investment Management. In terms of the portfolio weights assigned to each position North Run Capital allocated the biggest weight to Kaleyra, Inc. (NYSE:KLR), around 5.69% of its 13F portfolio. Whetstone Capital Advisors is also relatively very bullish on the stock, earmarking 1.53 percent of its 13F equity portfolio to KLR.

Because Kaleyra, Inc. (NYSE:KLR) has faced falling interest from the entirety of the hedge funds we track, we can see that there is a sect of hedge funds that elected to cut their entire stakes last quarter. At the top of the heap, Scott Stewart Miller’s Greenhaven Road Investment Management said goodbye to the biggest investment of all the hedgies monitored by Insider Monkey, totaling an estimated $3.2 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also dropped its stock, about $1.4 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Kaleyra, Inc. (NYSE:KLR) but similarly valued. We will take a look at Lightinthebox Holding Co Ltd (NYSE:LITB), Ideanomics, Inc. (NASDAQ:IDEX), Southern Missouri Bancorp, Inc. (NASDAQ:SMBC), CapStar Financial Holdings, Inc. (NASDAQ:CSTR), Greenhill & Co., Inc. (NYSE:GHL), Pure Cycle Corporation (NASDAQ:PCYO), and Hersha Hospitality Trust (NYSE:HT). This group of stocks’ market values are similar to KLR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LITB 3 3665 1
IDEX 3 264 -5
SMBC 4 7159 1
CSTR 6 10020 -1
GHL 9 15174 -4
PCYO 11 56424 -3
HT 12 13849 0
Average 6.9 15222 -1.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.9 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $28 million in KLR’s case. Hersha Hospitality Trust (NYSE:HT) is the most popular stock in this table. On the other hand Lightinthebox Holding Co Ltd (NYSE:LITB) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Kaleyra, Inc. (NYSE:KLR) is more popular among hedge funds. Our overall hedge fund sentiment score for KLR is 85. 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 returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on KLR as the stock returned 15.4% since the end of September (through 12/8) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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