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Kirkland’s, Inc. (KIRK): Hedge Funds and Insiders Are Bearish, What Should You Do?: Williams-Sonoma, Inc. (WSM), Pier 1 Imports, Inc. (PIR)

Is Kirkland’s, Inc. (NASDAQ:KIRK) a splendid investment now? The best stock pickers are in a pessimistic mood. The number of bullish hedge fund positions stayed the same which is a slightly negative development in our experience

Kirkland's, Inc. (NASDAQ:KIRK)At the moment, there are many indicators market participants can use to monitor the equity markets. A pair of the most underrated are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top hedge fund managers can trounce their index-focused peers by a significant margin (see just how much).

Just as important, positive insider trading activity is a second way to break down the world of equities. There are plenty of incentives for an upper level exec to cut shares of his or her company, but only one, very simple reason why they would buy. Many empirical studies have demonstrated the market-beating potential of this strategy if investors understand what to do (learn more here).

Consequently, it’s important to take a peek at the recent action regarding Kirkland’s, Inc. (NASDAQ:KIRK).

What does the smart money think about Kirkland’s, Inc. (NASDAQ:KIRK)?

At the end of the fourth quarter, a total of 8 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully.

Of the funds we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Kirkland’s, Inc. (NASDAQ:KIRK). Royce & Associates has a $12 million position in the stock, comprising 0% of its 13F portfolio. On Royce & Associates’s heels is Peter Algert and Kevin Coldiron of Algert Coldiron Investors, with a $2 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Cliff Asness’s AQR Capital Management, Jim Simons’s Renaissance Technologies and John Overdeck and David Siegel’s Two Sigma Advisors.

Since Kirkland’s, Inc. (NASDAQ:KIRK) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of money managers that decided to sell off their positions entirely in Q4. Interestingly, Israel Englander’s Millennium Management dumped the biggest stake of all the hedgies we track, comprising close to $1 million in stock. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

What have insiders been doing with Kirkland’s, Inc. (NASDAQ:KIRK)?

Insider purchases made by high-level executives is particularly usable when the company in question has experienced transactions within the past 180 days. Over the last half-year time frame, Kirkland’s, Inc. (NASDAQ:KIRK) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Kirkland’s, Inc. (NASDAQ:KIRK). These stocks are Williams-Sonoma, Inc. (NYSE:WSM), Pier 1 Imports, Inc. (NYSE:PIR), Restoration Hardware Holdings Inc (NYSE:RH), Haverty Furniture Companies, Inc. (NYSE:HVT), and Gordmans Stores, Inc. (NASDAQ:GMAN). All of these stocks are in the home furnishing stores industry and their market caps are closest to KIRK’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Williams-Sonoma, Inc. (NYSE:WSM) 22 0 7
Pier 1 Imports, Inc. (NYSE:PIR) 13 0 6
Restoration Hardware Holdings Inc (NYSE:RH) 9 2 2
Haverty Furniture Companies, Inc. (NYSE:HVT) 9 0 9
Gordmans Stores, Inc. (NASDAQ:GMAN) 5 0 0

With the returns demonstrated by the aforementioned tactics, everyday investors should always monitor hedge fund and insider trading activity, and Kirkland’s, Inc. (NASDAQ:KIRK) is an important part of this process.

Click here to learn why you should track hedge funds

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