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Kansas City Southern (KSU): Are Hedge Funds Right About This Stock?

Kansas City Southern (NYSE:KSU) shareholders have witnessed a decrease in enthusiasm from smart money lately.

Kansas City Southern (NYSE:KSU)

To the average investor, there are many indicators market participants can use to watch publicly traded companies. A duo of the best are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite hedge fund managers can trounce the broader indices by a healthy margin (see just how much).

Just as beneficial, bullish insider trading activity is another way to parse down the financial markets. As the old adage goes: there are a variety of reasons for an insider to get rid of shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the impressive potential of this method if you understand what to do (learn more here).

Keeping this in mind, it’s important to take a gander at the latest action regarding Kansas City Southern (NYSE:KSU).

Hedge fund activity in Kansas City Southern (NYSE:KSU)

In preparation for this year, a total of 9 of the hedge funds we track held long positions in this stock, a change of -36% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes significantly.

When looking at the hedgies we track, Ken Griffin’s Citadel Investment Group had the biggest position in Kansas City Southern (NYSE:KSU), worth close to $74 million, comprising 0.1% of its total 13F portfolio. The second largest stake is held by Ken Fisher of Fisher Asset Management, with a $62.7 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining hedgies that are bullish include Donald Chiboucis’s Columbus Circle Investors, D. E. Shaw’s D E Shaw and Steven Cohen’s SAC Capital Advisors.

Seeing as Kansas City Southern (NYSE:KSU) has experienced falling interest from the smart money, logic holds that there is a sect of money managers that elected to cut their positions entirely at the end of the year. At the top of the heap, Andrew Sandler’s Sandler Capital Management said goodbye to the biggest stake of the “upper crust” of funds we key on, valued at an estimated $13.6 million in stock.. Jeffrey Vinik’s fund, Vinik Asset Management, also said goodbye to its stock, about $9.7 million worth. These moves are important to note, as total hedge fund interest was cut by 5 funds at the end of the year.

What have insiders been doing with Kansas City Southern (NYSE:KSU)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company we’re looking at has seen transactions within the past six months. Over the latest half-year time frame, Kansas City Southern (NYSE:KSU) has seen zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Kansas City Southern (NYSE:KSU). These stocks are Westinghouse Air Brake Technologies Corp (NYSE:WAB), Genesee & Wyoming Inc (NYSE:GWR), Norfolk Southern Corp. (NYSE:NSC), CSX Corporation (NYSE:CSX), and Canadian Pacific Railway Limited (USA) (NYSE:CP). This group of stocks are in the railroads industry and their market caps match KSU’s market cap.

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