Is KT Corporation (KT) A Good Stock To Buy?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of KT Corporation (NYSE:KT) based on that data.

KT Corporation (NYSE:KT) investors should pay attention to a decrease in hedge fund interest in recent months. 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 below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Steven Cohen of Point72 Asset Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a glance at the fresh hedge fund action encompassing KT Corporation (NYSE:KT).

How have hedgies been trading KT Corporation (NYSE:KT)?

At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in KT a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, David Iben’s Kopernik Global Investors has the biggest position in KT Corporation (NYSE:KT), worth close to $87.7 million, accounting for 16.7% of its total 13F portfolio. The second largest stake is held by Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $50.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers with similar optimism encompass Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, Simon Sadler’s Segantii Capital and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Kopernik Global Investors allocated the biggest weight to KT Corporation (NYSE:KT), around 16.68% of its 13F portfolio. Segantii Capital is also relatively very bullish on the stock, designating 4.84 percent of its 13F equity portfolio to KT.

Seeing as KT Corporation (NYSE:KT) has experienced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there were a few money managers who sold off their full holdings last quarter. Interestingly, Cliff Asness’s AQR Capital Management dumped the biggest investment of the 750 funds tracked by Insider Monkey, worth about $19.6 million in stock, and Highbridge Capital Management was right behind this move, as the fund cut about $2.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 1 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as KT Corporation (NYSE:KT) but similarly valued. These stocks are Cullen/Frost Bankers, Inc. (NYSE:CFR), National Instruments Corporation (NASDAQ:NATI), Hanesbrands Inc. (NYSE:HBI), and Curtiss-Wright Corp. (NYSE:CW). 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
CFR 20 116202 2
NATI 22 310660 0
HBI 32 672396 10
CW 20 391825 1
Average 23.5 372771 3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $373 million. That figure was $268 million in KT’s case. Hanesbrands Inc. (NYSE:HBI) is the most popular stock in this table. On the other hand Cullen/Frost Bankers, Inc. (NYSE:CFR) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks KT Corporation (NYSE:KT) is even less popular than CFR. Hedge funds dodged a bullet by taking a bearish stance towards KT. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately KT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); KT investors were disappointed as the stock returned -0.5% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.

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