Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Kennedy-Wilson Holdings Inc (NYSE:KW) in this article.
Is KW a good stock to buy now? Kennedy-Wilson Holdings Inc (NYSE:KW) investors should pay attention to an increase in hedge fund interest of late. Kennedy-Wilson Holdings Inc (NYSE:KW) was in 18 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 23. Our calculations also showed that KW 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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 check out the new hedge fund action surrounding Kennedy-Wilson Holdings Inc (NYSE:KW).
Do Hedge Funds Think KW Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in KW over the last 21 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Fairfax Financial Holdings was the largest shareholder of Kennedy-Wilson Holdings Inc (NYSE:KW), with a stake worth $193.3 million reported as of the end of September. Trailing Fairfax Financial Holdings was Elkhorn Partners, which amassed a stake valued at $63.7 million. Royce & Associates, Sprott Asset Management, and Millennium Management 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 Elkhorn Partners allocated the biggest weight to Kennedy-Wilson Holdings Inc (NYSE:KW), around 49.58% of its 13F portfolio. Fairfax Financial Holdings is also relatively very bullish on the stock, designating 10.91 percent of its 13F equity portfolio to KW.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most valuable position in Kennedy-Wilson Holdings Inc (NYSE:KW). Marshall Wace LLP had $3.7 million invested in the company at the end of the quarter. Stuart J. Zimmer’s Zimmer Partners also initiated a $3.5 million position during the quarter. The following funds were also among the new KW investors: David Einhorn’s Greenlight Capital, Donald Sussman’s Paloma Partners, and Michael Gelband’s ExodusPoint Capital.
Let’s check out hedge fund activity in other stocks similar to Kennedy-Wilson Holdings Inc (NYSE:KW). These stocks are Brady Corp (NYSE:BRC), Moog Inc (NYSE:MOG), Arconic Corporation (NYSE:ARNC), The Brink’s Company (NYSE:BCO), Old National Bancorp (NYSE:ONB), SPX Corporation (NYSE:SPXC), and Canadian Solar Inc. (NASDAQ:CSIQ). This group of stocks’ market caps are closest to KW’s market cap.
|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 19.9 hedge funds with bullish positions and the average amount invested in these stocks was $214 million. That figure was $347 million in KW’s case. The Brink’s Company (NYSE:BCO) is the most popular stock in this table. On the other hand SPX Corporation (NYSE:SPXC) is the least popular one with only 13 bullish hedge fund positions. Kennedy-Wilson Holdings Inc (NYSE:KW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KW is 49.1. 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 KW as the stock returned 17.8% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.