There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze The Kroger Co. (NYSE:KR).
The Kroger Co. (NYSE:KR) has experienced an increase in activity from the world’s largest hedge funds lately. At the end of this article we will also compare KR to other stocks including Bank of Montreal (USA) (NYSE:BMO), CIGNA Corporation (NYSE:CI), and BCE Inc. (USA) (NYSE:BCE) to get a better sense of its popularity.
Follow Kroger Co (NYSE:KR)
Follow Kroger Co (NYSE:KR)
With all of this in mind, we’re going to check out the latest action encompassing The Kroger Co. (NYSE:KR).
Hedge fund activity in The Kroger Co. (NYSE:KR)
At the end of the third quarter, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from the previous quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Steven Richman’s East Side Capital (RR Partners) has the biggest position in The Kroger Co. (NYSE:KR), worth close to $308.2 million, comprising 13.2% of its total 13F portfolio. Coming in second is AQR Capital Management, led by Cliff Asness, holding an $242.2 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish consist of Ken Griffin’s Citadel Investment Group, John Overdeck and David Siegel’s Two Sigma Advisors and David Harding’s Winton Capital Management.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, created the biggest position in The Kroger Co. (NYSE:KR). Balyasny Asset Management had $26 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also made an $9.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Benjamin A. Smith’s Laurion Capital Management, David Costen Haley’s HBK Investments, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now review hedge fund activity in other stocks similar to The Kroger Co. (NYSE:KR). These stocks are Bank of Montreal (USA) (NYSE:BMO), CIGNA Corporation (NYSE:CI), BCE Inc. (USA) (NYSE:BCE), and Yum! Brands, Inc. (NYSE:YUM). This group of stocks’ market caps match KR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BMO | 17 | 201745 | -2 |
| CI | 76 | 3239730 | -2 |
| BCE | 14 | 247070 | -5 |
| YUM | 65 | 5045676 | 6 |
As you can see these stocks had an average of 43 hedge funds with bullish positions and the average amount invested in these stocks was $2184 million. That figure was $1278 million in KR’s case. CIGNA Corporation (NYSE:CI) is the most popular stock in this table. On the other hand BCE Inc. (USA) (NYSE:BCE) is the least popular one with only 14 bullish hedge fund positions. The Kroger Co. (NYSE:KR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CI might be a better candidate to consider a long position.
