Hedge Funds Are Betting On Kroger Co. (KR)

Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds and investors’ positions as of the end of the third quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Kroger Co. (NYSE:KR) based on that data.

Kroger Co. (NYSE:KR) was in 42 hedge funds’ portfolios at the end of the third quarter of 2015. Kroger Co. (NYSE:KR) has seen an increase in hedge fund interest in recent months. There were 33 hedge funds in our database with Kroger Co. (NYSE:KR) positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Bank of Montreal (USA) (NYSE:BMO), CIGNA Corporation (NYSE:CI), and BCE Inc. (USA) (NYSE:BCE) to gather more data points.

According to most stock holders, hedge funds are assumed to be slow, old investment tools of yesteryear. While there are over 8000 funds trading at present, we choose to focus on the aristocrats of this club, about 700 funds. Most estimates calculate that this group of people preside over the majority of the hedge fund industry’s total asset base, and by tracking their best equity investments, Insider Monkey has found many investment strategies that have historically outperformed Mr. Market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Now, we’re going to take a gander at the key action surrounding Kroger Co. (NYSE:KR).

How have hedgies been trading Kroger Co. (NYSE:KR)?

Heading into Q4, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 27% from one quarter earlier. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Steven Richman’s East Side Capital (RR Partners) has the largest position in Kroger Co. (NYSE:KR), worth close to $308.2 million, amounting to 13.2% of its total 13F portfolio. The second most bullish fund manager is AQR Capital Management, led by Cliff Asness, holding a $242.2 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other peers that hold long positions contain Ken Griffin’s Citadel Investment Group, John Overdeck and David Siegel’s Two Sigma Advisors, and David Harding’s Winton Capital Management.

As industrywide interest jumped, some big names have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the largest position in Kroger Co. (NYSE:KR). Balyasny Asset Management had $26 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also made a $9.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Benjamin A. Smith’s Laurion Capital Management, David Costen Haley’s HBK Investments, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s also examine 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 Bank of Montreal (USA) (NYSE:BMO), CIGNA Corporation (NYSE:CI), BCE Inc. (USA) (NYSE:BCE), and Yum! Brands, Inc. (NYSE:YUM). This group of stocks’ market caps is closest to Kroger Co. (NYSE:KR)’s market cap.

As you can see, these stocks had an average of 43 hedge funds with bullish positions and the average amount invested in these stocks was $2.18 billion. That figure was $1.28 million in Kroger Co. (NYSE:KR)’s case. CIGNA Corporation (NYSE:CI) is the most popular stock in this table. On the other hand, BCE Inc. (USA) (NYSE:BCE) is the least popular one with only 14 bullish hedge fund positions. Kroger Co. (NYSE:KR) 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, CIGNA Corporation (NYSE:CI) might be a better candidate to consider a long position.