In this article we are going to use hedge fund sentiment as a tool and determine whether Koppers Holdings Inc. (NYSE:KOP) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is KOP a good stock to buy now? The smart money was buying. The number of bullish hedge fund positions rose by 1 in recent months. Koppers Holdings Inc. (NYSE:KOP) was in 12 hedge funds’ portfolios at the end of September. The all time high for this statistics is 20. Our calculations also showed that KOP 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). There were 11 hedge funds in our database with KOP positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most investors, hedge funds are assumed to be slow, outdated financial tools of the past. While there are greater than 8000 funds with their doors open at the moment, Our experts choose to focus on the bigwigs of this group, about 850 funds. These money managers preside over bulk of the hedge fund industry’s total capital, and by monitoring their top picks, Insider Monkey has identified a number of investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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. Keeping this in mind we’re going to take a look at the latest hedge fund action surrounding Koppers Holdings Inc. (NYSE:KOP).
Do Hedge Funds Think KOP Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in KOP a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Arrowstreet Capital was the largest shareholder of Koppers Holdings Inc. (NYSE:KOP), with a stake worth $4.6 million reported as of the end of September. Trailing Arrowstreet Capital was Millennium Management, which amassed a stake valued at $2.9 million. AQR Capital Management, D E Shaw, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ancora Advisors allocated the biggest weight to Koppers Holdings Inc. (NYSE:KOP), around 0.03% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to KOP.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Ancora Advisors, managed by Frederick DiSanto, assembled the biggest position in Koppers Holdings Inc. (NYSE:KOP). Ancora Advisors had $0.7 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $0.5 million position during the quarter. The only other fund with a brand new KOP position is Thomas Bailard’s Bailard Inc.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Koppers Holdings Inc. (NYSE:KOP) but similarly valued. These stocks are G1 Therapeutics, Inc. (NASDAQ:GTHX), Mechel PAO (NYSE:MTL), eGain Corporation (NASDAQ:EGAN), Luther Burbank Corporation (NASDAQ:LBC), Boston Omaha Corporation (NASDAQ:BOMN), Catchmark Timber Trust Inc (NYSE:CTT), and Aegion Corp (NASDAQ:AEGN). This group of stocks’ market values are similar to KOP’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.3 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $16 million in KOP’s case. G1 Therapeutics, Inc. (NASDAQ:GTHX) is the most popular stock in this table. On the other hand Mechel PAO (NYSE:MTL) is the least popular one with only 3 bullish hedge fund positions. Koppers Holdings Inc. (NYSE:KOP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KOP is 69. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on KOP as the stock returned 30.5% since the end of Q3 (through 12/8) 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.