Where Do Hedge Funds Stand On The Kroger Co. (KR)?

Is The Kroger Co. (NYSE:KR) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Hedge fund interest in The Kroger Co. (NYSE:KR) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that KR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare KR to other stocks including Ameriprise Financial, Inc. (NYSE:AMP), Willis Towers Watson Public Limited Company (NASDAQ:WLTW), and Garmin Ltd. (NASDAQ:GRMN) to get a better sense of its popularity.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now let’s take a look at the recent hedge fund action surrounding The Kroger Co. (NYSE:KR).

Do Hedge Funds Think KR Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in KR over the last 25 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Berkshire Hathaway, managed by Warren Buffett, holds the number one position in The Kroger Co. (NYSE:KR). Berkshire Hathaway has a $2.4981 billion position in the stock, comprising 0.9% of its 13F portfolio. Coming in second is Renaissance Technologies, with a $750.9 million position; 1% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors with similar optimism include Ken Griffin’s Citadel Investment Group, Cliff Asness’s AQR Capital Management and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position L2 Asset Management allocated the biggest weight to The Kroger Co. (NYSE:KR), around 2.63% of its 13F portfolio. Game Creek Capital is also relatively very bullish on the stock, dishing out 2.22 percent of its 13F equity portfolio to KR.

Judging by the fact that The Kroger Co. (NYSE:KR) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of funds that decided to sell off their full holdings in the third quarter. At the top of the heap, Donald Sussman’s Paloma Partners dropped the largest stake of all the hedgies monitored by Insider Monkey, valued at about $1.9 million in stock, and Andrew Weiss’s Weiss Asset Management was right behind this move, as the fund cut about $1.8 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as The Kroger Co. (NYSE:KR) but similarly valued. We will take a look at Ameriprise Financial, Inc. (NYSE:AMP), Willis Towers Watson Public Limited Company (NASDAQ:WLTW), Garmin Ltd. (NASDAQ:GRMN), TELUS Corporation (NYSE:TU), Paycom Software Inc (NYSE:PAYC), ANSYS, Inc. (NASDAQ:ANSS), and Fastenal Company (NASDAQ:FAST). All of these stocks’ market caps are similar to KR’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.9 hedge funds with bullish positions and the average amount invested in these stocks was $1500 million. That figure was $3920 million in KR’s case. Willis Towers Watson Public Limited Company (NASDAQ:WLTW) is the most popular stock in this table. On the other hand TELUS Corporation (NYSE:TU) is the least popular one with only 12 bullish hedge fund positions. The Kroger Co. (NYSE:KR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KR is 51.9. 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 positive signal but 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately KR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on KR were disappointed as the stock returned 3.2% since the end of September (through 11/30) 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 many of these stocks already outperformed the market since 2019.

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