Is KRNT A Good Stock To Buy Now?

In this article you are going to find out whether hedge funds think Kornit Digital Ltd. (NASDAQ:KRNT) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is KRNT a good stock to buy now? Investors who are in the know were buying. The number of long hedge fund bets inched up by 9 recently. Kornit Digital Ltd. (NASDAQ:KRNT) was in 18 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 14. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that KRNT 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 9 hedge funds in our database with KRNT positions at the end of the second quarter.

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.

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

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. With all of this in mind we’re going to take a glance at the new hedge fund action surrounding Kornit Digital Ltd. (NASDAQ:KRNT).

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

Heading into the fourth quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in KRNT over the last 21 quarters. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

Is KRNT A Good Stock To Buy?

The largest stake in Kornit Digital Ltd. (NASDAQ:KRNT) was held by Noked Capital, which reported holding $14.9 million worth of stock at the end of September. It was followed by Driehaus Capital with a $14 million position. Other investors bullish on the company included G2 Investment Partners Management, Sphera Global Healthcare Fund, and Intrinsic Edge Capital. In terms of the portfolio weights assigned to each position Noked Capital allocated the biggest weight to Kornit Digital Ltd. (NASDAQ:KRNT), around 9.9% of its 13F portfolio. G2 Investment Partners Management is also relatively very bullish on the stock, dishing out 2.52 percent of its 13F equity portfolio to KRNT.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Noked Capital, managed by Roy Vermus and Shlomi Bracha, created the most outsized position in Kornit Digital Ltd. (NASDAQ:KRNT). Noked Capital had $14.9 million invested in the company at the end of the quarter. Mark Coe’s Intrinsic Edge Capital also made a $9.3 million investment in the stock during the quarter. The following funds were also among the new KRNT investors: Noam Gottesman’s GLG Partners, Matthew L Pinz’s Pinz Capital, and Hoon Kim’s Quantinno Capital.

Let’s also examine hedge fund activity in other stocks similar to Kornit Digital Ltd. (NASDAQ:KRNT). We will take a look at Intercorp Financial Services Inc. (NYSE:IFS), Colliers International Group Inc (NASDAQ:CIGI), W.R. Grace & Co. (NYSE:GRA), Shake Shack Inc (NYSE:SHAK), Cohen & Steers, Inc. (NYSE:CNS), Workiva Inc (NYSE:WK), and Corporate Office Properties Trust (NYSE:OFC). This group of stocks’ market values are similar to KRNT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IFS 2 24716 0
CIGI 10 594942 -1
GRA 39 975834 0
SHAK 26 521466 4
CNS 22 66119 1
WK 20 243844 -1
OFC 21 192411 1
Average 20 374190 0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $374 million. That figure was $86 million in KRNT’s case. W.R. Grace & Co. (NYSE:GRA) is the most popular stock in this table. On the other hand Intercorp Financial Services Inc. (NYSE:IFS) is the least popular one with only 2 bullish hedge fund positions. Kornit Digital Ltd. (NASDAQ:KRNT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KRNT is 61.6. 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. A small number of hedge funds were also right about betting on KRNT as the stock returned 29.6% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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