Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

KKR Financial Holdings LLC (KFN): Insiders Are Buying, Should You?

KKR Financial Holdings LLC (NYSE:KFN) was in 18 hedge funds’ portfolio at the end of the first quarter of 2013. KFN investors should pay attention to a decrease in support from the world’s most elite money managers recently. There were 19 hedge funds in our database with KFN holdings at the end of the previous quarter.

KKR Financial Holdings LLC (NYSE:KFN)

According to most investors, hedge funds are assumed to be underperforming, outdated financial tools of yesteryear. While there are greater than 8000 funds in operation at present, we look at the aristocrats of this group, about 450 funds. It is widely believed that this group oversees most of the hedge fund industry’s total asset base, and by monitoring their highest performing stock picks, we have determined a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as key, optimistic insider trading sentiment is a second way to break down the world of equities. Just as you’d expect, there are plenty of stimuli for a corporate insider to drop shares of his or her company, but only one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the useful potential of this strategy if you understand what to do (learn more here).

With these “truths” under our belt, we’re going to take a look at the recent action encompassing KKR Financial Holdings LLC (NYSE:KFN).

What does the smart money think about KKR Financial Holdings LLC (NYSE:KFN)?

At the end of the first quarter, a total of 18 of the hedge funds we track were bullish in this stock, a change of -5% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes significantly.

Of the funds we track, Leon Cooperman’s Omega Advisors had the biggest position in KKR Financial Holdings LLC (NYSE:KFN), worth close to $152.8 million, accounting for 2.4% of its total 13F portfolio. On Omega Advisors’s heels is Wayne Cooperman of Cobalt Capital Management, with a $35.4 million position; the fund has 2.7% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Anthony Bozza’s Lakewood Capital Management, Jim Simons’s Renaissance Technologies and Chuck Royce’s Royce & Associates.

Judging by the fact that KKR Financial Holdings LLC (NYSE:KFN) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of hedge funds that decided to sell off their full holdings last quarter. Intriguingly, Alok Agrawal’s Bloom Tree Partners dumped the biggest investment of the “upper crust” of funds we track, comprising close to $6.6 million in stock.. Joseph A. Jolson’s fund, Harvest Capital Strategies, also said goodbye to its stock, about $0.8 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 1 funds last quarter.

Insider trading activity in KKR Financial Holdings LLC (NYSE:KFN)

Insider trading activity, especially when it’s bullish, is at its handiest when the primary stock in question has experienced transactions within the past six months. Over the last six-month time period, KKR Financial Holdings LLC (NYSE:KFN) has experienced 2 unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to KKR Financial Holdings LLC (NYSE:KFN). These stocks are Home Loan Servicing Solutions Ltd (NASDAQ:HLSS), Walter Investment Management Corp (NYSE:WAC), Nationstar Mortgage Holdings Inc (NYSE:NSM), Altisource Portfolio Solutions S.A. (NASDAQ:ASPS), and Invesco Mortgage Capital Inc (NYSE:IVR). This group of stocks are the members of the mortgage investment industry and their market caps are similar to KFN’s market cap.