KT Corporation (KT): Hedge Funds Cashing Out

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards KT Corporation (NYSE:KT).

KT Corporation (NYSE:KT) shareholders have witnessed a decrease in activity from the world’s largest hedge funds lately. Our calculations also showed that KT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In today’s marketplace there are tons of tools market participants have at their disposal to value publicly traded companies. Some of the most useful tools are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the elite money managers can trounce the S&P 500 by a healthy margin (see the details here).

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 free email services without phone verification to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the new hedge fund action encompassing KT Corporation (NYSE:KT).

What does smart money think about KT Corporation (NYSE:KT)?

At Q1’s end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KT over the last 18 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

The largest stake in KT Corporation (NYSE:KT) was held by Kopernik Global Investors, which reported holding $63.8 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $34.1 million position. Other investors bullish on the company included LMR Partners, D E Shaw, and Sensato Capital Management. In terms of the portfolio weights assigned to each position Kopernik Global Investors allocated the biggest weight to KT Corporation (NYSE:KT), around 13.59% of its 13F portfolio. Sensato Capital Management is also relatively very bullish on the stock, setting aside 4.75 percent of its 13F equity portfolio to KT.

Seeing as KT Corporation (NYSE:KT) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few hedge funds that decided to sell off their entire stakes heading into Q4. Interestingly, Noam Gottesman’s GLG Partners dumped the largest stake of the “upper crust” of funds watched by Insider Monkey, comprising about $13 million in stock, and Lee Ainslie’s Maverick Capital was right behind this move, as the fund sold off about $4.3 million worth. These moves are important to note, as total hedge fund interest was cut by 2 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as KT Corporation (NYSE:KT) but similarly valued. We will take a look at Armstrong World Industries, Inc. (NYSE:AWI), First Solar, Inc. (NASDAQ:FSLR), Landstar System, Inc. (NASDAQ:LSTR), and Spire Inc. (NYSE:SR). This group of stocks’ market caps are similar to KT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AWI 20 323045 -4
FSLR 22 150839 -2
LSTR 22 156653 -2
SR 13 40465 1
Average 19.25 167751 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $168 million. That figure was $159 million in KT’s case. First Solar, Inc. (NASDAQ:FSLR) is the most popular stock in this table. On the other hand Spire Inc. (NYSE:SR) is the least popular one with only 13 bullish hedge fund positions. KT Corporation (NYSE:KT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on KT, though not to the same extent, as the stock returned 23.4% during the second quarter and outperformed the market.

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Disclosure: None. This article was originally published at Insider Monkey.