The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards KT Corporation (NYSE:KT).
Is KT a good stock to buy now? Hedge funds were taking a bearish view. The number of bullish hedge fund positions fell by 2 recently. KT Corporation (NYSE:KT) was in 10 hedge funds’ portfolios at the end of September. The all time high for this statistics is 22. Our calculations also showed that KT 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 12 hedge funds in our database with KT holdings at the end of June.
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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 let’s take a look at the latest hedge fund action encompassing KT Corporation (NYSE:KT).
Do Hedge Funds Think KT Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KT over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Kopernik Global Investors was the largest shareholder of KT Corporation (NYSE:KT), with a stake worth $79.8 million reported as of the end of September. Trailing Kopernik Global Investors was Arrowstreet Capital, which amassed a stake valued at $30.4 million. LMR Partners, D E Shaw, and Two Sigma Advisors 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 Kopernik Global Investors allocated the biggest weight to KT Corporation (NYSE:KT), around 12.37% of its 13F portfolio. LMR Partners is also relatively very bullish on the stock, earmarking 0.58 percent of its 13F equity portfolio to KT.
Because KT Corporation (NYSE:KT) has faced declining sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of fund managers who were dropping their entire stakes last quarter. Intriguingly, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors dropped the largest investment of the “upper crust” of funds watched by Insider Monkey, valued at about $1.5 million in stock. Greg Eisner’s fund, Engineers Gate Manager, also sold off its stock, about $0.1 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to KT Corporation (NYSE:KT). These stocks are Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH), Wyndham Hotels & Resorts, Inc. (NYSE:WH), FLIR Systems, Inc. (NASDAQ:FLIR), National Instruments Corporation (NASDAQ:NATI), LG Display Co Ltd. (NYSE:LPL), Jefferies Financial Group Inc. (NYSE:JEF), and Brunswick Corporation (NYSE:BC). This group of stocks’ market values match KT’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 25.7 hedge funds with bullish positions and the average amount invested in these stocks was $384 million. That figure was $148 million in KT’s case. Brunswick Corporation (NYSE:BC) is the most popular stock in this table. On the other hand LG Display Co Ltd. (NYSE:LPL) is the least popular one with only 7 bullish hedge fund positions. KT Corporation (NYSE:KT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KT is 22.2. 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. A small number of hedge funds were also right about betting on KT as the stock returned 16.1% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.