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Should You Avoid Kimball International Inc (KBAL)?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Kimball International Inc (NASDAQ:KBAL)? The smart money sentiment can provide an answer to this question.

Kimball International Inc (NASDAQ:KBAL) was in 9 hedge funds’ portfolios at the end of September. Kimball International Inc (NASDAQ:KBAL) has seen a decrease in activity from the world’s largest hedge funds lately. There were 11 hedge funds in our database with Kimball International Inc (NASDAQ:KBAL) positions at the end of the previous quarter. It is important to note that the shares of the company were trading 22.2% lower during the third quarter, aligning perfectly with the hedge fund sentiment.

In order to find out more about the hedge fund sentiment, we will compare Kimball International Inc (NASDAQ:KBAL) to other stocks including Landauer, Inc. (NYSE:LDR), Spok Holdings Inc (NASDAQ:SPOK), and Jive Software Inc (NASDAQ:JIVE) to get a better sense of its popularity.

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Today, there are a lot of methods stock traders have at their disposal to grade publicly traded companies. Two of the less utilized methods are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite fund managers can outclass their index-focused peers by a significant margin (see the details here).

Now, let’s check out the latest action surrounding Kimball International Inc (NASDAQ:KBAL).

What have hedge funds been doing with Kimball International Inc (NASDAQ:KBAL)?

At the end of September, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 18% from the second quarter. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the number one position in Kimball International Inc (NASDAQ:KBAL), worth close to $12.9 million, accounting for 0.1% of its total 13F portfolio. Coming in second is Renaissance Technologies, which holds a $5.1 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish consist of Mario Gabelli’s GAMCO Investors, Peter Keane’s Keane Capital Management, and D E Shaw.

Since Kimball International Inc (NASDAQ:KBAL) has experienced a declination in interest from the entirety of the hedge funds we track, we can see that there is a sect of fund managers who were dropping their full holdings by the end of the third quarter. Interestingly, Richard S. Meisenberg’s ACK Asset Management dumped the biggest stake of all the hedgies followed by Insider Monkey, worth close to $5.1 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund dropped about $0.5 million worth of shares. These bearish behaviors are important to note, as total hedge fund interest fell by 2 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Kimball International Inc (NASDAQ:KBAL) but similarly valued. We will take a look at Landauer, Inc. (NYSE:LDR), Spok Holdings Inc (NASDAQ:SPOK), Jive Software Inc (NASDAQ:JIVE), and Powell Industries, Inc. (NASDAQ:POWL). This group of stocks’ market valuations resemble Kimball International Inc (NASDAQ:KBAL)’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LDR 7 49025 1
SPOK 10 32815 2
JIVE 14 39637 -8
POWL 10 44566 2

As you can see, these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $25 million in Kimball International Inc (NASDAQ:KBAL)’s case. Jive Software Inc (NASDAQ:JIVE) is the most popular stock in this table. On the other hand, Landauer, Inc. (NYSE:LDR) is the least popular one with only 7 bullish hedge fund positions. Kimball International Inc (NASDAQ:KBAL) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Jive Software Inc (NASDAQ:JIVE) might be a better candidate to consider a long position.

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