Did Hedge Funds Make The Right Call On Kimco Realty Corp (KIM) ?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtKimco Realty Corp (NYSE:KIM) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Kimco Realty Corp (NYSE:KIM) has experienced an increase in hedge fund sentiment lately. KIM was in 22 hedge funds’ portfolios at the end of March. There were 16 hedge funds in our database with KIM holdings at the end of the previous quarter. Our calculations also showed that KIM 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

David Harding of Winton Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. With all of this in mind we’re going to take a look at the key hedge fund action regarding Kimco Realty Corp (NYSE:KIM).

How are hedge funds trading Kimco Realty Corp (NYSE:KIM)?

At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 38% from the fourth quarter of 2019. On the other hand, there were a total of 11 hedge funds with a bullish position in KIM a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Renaissance Technologies held the most valuable stake in Kimco Realty Corp (NYSE:KIM), which was worth $26.3 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $5.6 million worth of shares. Millennium Management, Adage Capital Management, and Winton Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Neo Ivy Capital allocated the biggest weight to Kimco Realty Corp (NYSE:KIM), around 0.37% of its 13F portfolio. Schonfeld Strategic Advisors is also relatively very bullish on the stock, setting aside 0.14 percent of its 13F equity portfolio to KIM.

Consequently, some big names have jumped into Kimco Realty Corp (NYSE:KIM) headfirst. Citadel Investment Group, managed by Ken Griffin, initiated the largest position in Kimco Realty Corp (NYSE:KIM). Citadel Investment Group had $5.6 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $5.4 million investment in the stock during the quarter. The other funds with brand new KIM positions are Dmitry Balyasny’s Balyasny Asset Management, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Kimco Realty Corp (NYSE:KIM) but similarly valued. These stocks are Arrow Electronics, Inc. (NYSE:ARW), Invesco Ltd. (NYSE:IVZ), ICU Medical, Inc. (NASDAQ:ICUI), and United Therapeutics Corporation (NASDAQ:UTHR). This group of stocks’ market valuations resemble KIM’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $535 million. That figure was $55 million in KIM’s case. United Therapeutics Corporation (NASDAQ:UTHR) is the most popular stock in this table. On the other hand Arrow Electronics, Inc. (NYSE:ARW) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Kimco Realty Corp (NYSE:KIM) is even less popular than ARW. Hedge funds clearly dropped the ball on KIM as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on KIM as the stock returned 36.7% in the second quarter and outperformed the market by an even larger margin.

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