Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: KLX Inc (NASDAQ:KLXI).
KLX Inc (NASDAQ:KLXI) was in 22 hedge funds’ portfolios at the end of September. KLXI shareholders have witnessed a decrease in activity from the world’s largest hedge funds recently. There were 23 hedge funds in our database with KLXI positions at the end of the previous quarter. At the end of this article we will also compare KLXI to other stocks including Coeur d’Alene Mines Corporation (NYSE:CDE), Itron, Inc. (NASDAQ:ITRI), and Financial Engines Inc (NASDAQ:FNGN) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Now, we’re going to take a look at the new action encompassing KLX Inc (NASDAQ:KLXI).
What does the smart money think about KLX Inc (NASDAQ:KLXI)?
At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Thomas Steyer’s Farallon Capital has the largest position in KLX Inc (NASDAQ:KLXI), worth close to $99.4 million, accounting for 1.5% of its total 13F portfolio. The second largest stake is held by Baupost Group, led by Seth Klarman, holding a $70.4 million position; 1% of its 13F portfolio is allocated to the company. Other peers that are bullish consist of Robert Pohly’s Samlyn Capital, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.