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Were Hedge Funds Right About Flocking Into Kemper Corporation (KMPR) ?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of December. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Kemper Corporation (NYSE:KMPR), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Kemper Corporation (NYSE:KMPR) the right pick for your portfolio? Money managers are getting more optimistic. The number of bullish hedge fund bets inched up by 1 lately. Our calculations also showed that KMPR isn’t among the 30 most popular stocks among hedge funds. KMPR was in 15 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 14 hedge funds in our database with KMPR positions at the end of the previous quarter.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

CHILTON INVESTMENT COMPANY

We’re going to go over the fresh hedge fund action regarding Kemper Corporation (NYSE:KMPR).

Hedge fund activity in Kemper Corporation (NYSE:KMPR)

Heading into the first quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the second quarter of 2018. On the other hand, there were a total of 11 hedge funds with a bullish position in KMPR a year ago. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

KMPR_apr2019

More specifically, Citadel Investment Group was the largest shareholder of Kemper Corporation (NYSE:KMPR), with a stake worth $29.2 million reported as of the end of September. Trailing Citadel Investment Group was Renaissance Technologies, which amassed a stake valued at $25.5 million. Chilton Investment Company, GLG Partners, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.

Now, specific money managers have jumped into Kemper Corporation (NYSE:KMPR) headfirst. 12th Street Asset Management, managed by Michael O’Keefe, initiated the largest position in Kemper Corporation (NYSE:KMPR). 12th Street Asset Management had $2.8 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also initiated a $0.7 million position during the quarter. The following funds were also among the new KMPR investors: Matthew Hulsizer’s PEAK6 Capital Management and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s check out hedge fund activity in other stocks similar to Kemper Corporation (NYSE:KMPR). We will take a look at Pivotal Software, Inc. (NYSE:PVTL), Crane Co. (NYSE:CR), Loxo Oncology Inc (NASDAQ:LOXO), and SolarWinds Corporation (NYSE:SWI). This group of stocks’ market caps resemble KMPR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PVTL 32 401392 14
CR 23 262775 4
LOXO 28 788056 -2
SWI 15 1989321 15
Average 24.5 860386 7.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $860 million. That figure was $108 million in KMPR’s case. Pivotal Software, Inc. (NYSE:PVTL) is the most popular stock in this table. On the other hand SolarWinds Corporation (NYSE:SWI) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Kemper Corporation (NYSE:KMPR) is even less popular than SWI. Hedge funds clearly dropped the ball on KMPR as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on KMPR as the stock returned 27.7% and outperformed the market by an even larger margin.

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

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