The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 873 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article we look at what those investors think of Korn Ferry (NYSE:KFY).
Is Korn Ferry (NYSE:KFY) a cheap investment today? Prominent investors were taking a bullish view. The number of long hedge fund bets inched up by 5 lately. Korn Ferry (NYSE:KFY) was in 21 hedge funds’ portfolios at the end of June. The all time high for this statistic is 28. Our calculations also showed that KFY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
John Rogers of Ariel Investments
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to take a peek at the fresh hedge fund action regarding Korn Ferry (NYSE:KFY).
Do Hedge Funds Think KFY Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 31% from one quarter earlier. On the other hand, there were a total of 28 hedge funds with a bullish position in KFY a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Korn Ferry (NYSE:KFY) was held by Paradice Investment Management, which reported holding $74.8 million worth of stock at the end of June. It was followed by Ariel Investments with a $60.9 million position. Other investors bullish on the company included Royce & Associates, Lakewood Capital Management, and Kerrisdale Capital. In terms of the portfolio weights assigned to each position Paradice Investment Management allocated the biggest weight to Korn Ferry (NYSE:KFY), around 3.47% of its 13F portfolio. Kerrisdale Capital is also relatively very bullish on the stock, designating 1.35 percent of its 13F equity portfolio to KFY.
Consequently, key money managers have been driving this bullishness. Renaissance Technologies, initiated the most outsized position in Korn Ferry (NYSE:KFY). Renaissance Technologies had $10.1 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also made a $9.9 million investment in the stock during the quarter. The following funds were also among the new KFY investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Korn Ferry (NYSE:KFY) but similarly valued. These stocks are Brighthouse Financial, Inc. (NASDAQ:BHF), ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), Cushman & Wakefield plc (NYSE:CWK), Ormat Technologies, Inc. (NYSE:ORA), Freedom Holding Corp. (NASDAQ:FRHC), National Storage Affiliates Trust (NYSE:NSA), and Ambarella Inc (NASDAQ:AMBA). This group of stocks’ market values are closest to KFY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BHF | 26 | 494240 | -2 |
| ACAD | 21 | 1390015 | -12 |
| CWK | 23 | 245483 | 4 |
| ORA | 21 | 242956 | 4 |
| FRHC | 13 | 64432 | 1 |
| NSA | 20 | 208028 | 6 |
| AMBA | 37 | 341764 | 2 |
| Average | 23 | 426703 | 0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $427 million. That figure was $248 million in KFY’s case. Ambarella Inc (NASDAQ:AMBA) is the most popular stock in this table. On the other hand Freedom Holding Corp. (NASDAQ:FRHC) is the least popular one with only 13 bullish hedge fund positions. Korn Ferry (NYSE:KFY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KFY is 49.2. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately KFY wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); KFY investors were disappointed as the stock returned 1% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
