This Metric Says You Are Smart to Buy Kansas City Southern (KSU)

Page 1 of 2

Kansas City Southern (NYSE:KSU) was in 16 hedge funds’ portfolio at the end of the first quarter of 2013. KSU investors should be aware of an increase in support from the world’s most elite money managers lately. There were 11 hedge funds in our database with KSU holdings at the end of the previous quarter.

In today’s marketplace, there are many gauges shareholders can use to watch Mr. Market. A duo of the most under-the-radar are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best investment managers can outclass the market by a superb amount (see just how much).

Just as key, positive insider trading activity is another way to parse down the world of equities. There are lots of reasons for a bullish insider to drop shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the valuable potential of this method if investors understand where to look (learn more here).

With these “truths” under our belt, we’re going to take a glance at the key action regarding Kansas City Southern (NYSE:KSU).

What does the smart money think about Kansas City Southern (NYSE:KSU)?

At the end of the first quarter, a total of 16 of the hedge funds we track were bullish in this stock, a change of 45% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly.

According to our comprehensive database, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in Kansas City Southern (NYSE:KSU). Citadel Investment Group has a $113.2 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Ken Fisher of Fisher Asset Management, with a $83.5 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Donald Chiboucis’s Columbus Circle Investors, Andrew Sandler’s Sandler Capital Management and Matthew Hulsizer’s PEAK6 Capital Management.

As aggregate interest increased, specific money managers have been driving this bullishness. Sandler Capital Management, managed by Andrew Sandler, initiated the most valuable position in Kansas City Southern (NYSE:KSU). Sandler Capital Management had 22.9 million invested in the company at the end of the quarter. Robert Boucai’s Newbrook Capital Advisors also made a $13.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Jim Simons’s Renaissance Technologies, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Joshua Berkowitz’s Woodbine Capital.

What have insiders been doing with Kansas City Southern (NYSE:KSU)?

Insider purchases made by high-level executives is at its handiest when the primary stock in question has experienced transactions within the past half-year. Over the latest six-month time period, Kansas City Southern (NYSE:KSU) has experienced zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Kansas City Southern (NYSE:KSU). These stocks are Westinghouse Air Brake Technologies Corp (NYSE:WAB), Genesee & Wyoming Inc (NYSE:GWR), Norfolk Southern Corp. (NYSE:NSC), CSX Corporation (NYSE:CSX), and Canadian Pacific Railway Limited (USA) (NYSE:CP). This group of stocks are in the railroads industry and their market caps match KSU’s market cap.

Page 1 of 2