At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Korn Ferry (NYSE:KFY).
Korn Ferry (NYSE:KFY) has seen an increase in hedge fund sentiment in recent months. Our calculations also showed that KFY 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.
Today there are several formulas stock market investors use to appraise stocks. Two of the best formulas are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outpace their index-focused peers by a solid amount (see the details here).
Sahm Adrangi of Kerrisdale Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a gander at the key hedge fund action surrounding Korn Ferry (NYSE:KFY).
What have hedge funds been doing with Korn Ferry (NYSE:KFY)?
At Q1’s end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the previous quarter. On the other hand, there were a total of 21 hedge funds with a bullish position in KFY a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, Lakewood Capital Management was the largest shareholder of Korn Ferry (NYSE:KFY), with a stake worth $22.1 million reported as of the end of September. Trailing Lakewood Capital Management was Royce & Associates, which amassed a stake valued at $21.5 million. Coliseum Capital, Kerrisdale Capital, and Ariel Investments 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 Coliseum Capital allocated the biggest weight to Korn Ferry (NYSE:KFY), around 4.93% of its 13F portfolio. Kerrisdale Capital is also relatively very bullish on the stock, designating 3.28 percent of its 13F equity portfolio to KFY.
Now, key hedge funds were leading the bulls’ herd. Lakewood Capital Management, managed by Anthony Bozza, created the biggest position in Korn Ferry (NYSE:KFY). Lakewood Capital Management had $22.1 million invested in the company at the end of the quarter. Christopher Shackelton and Adam Gray’s Coliseum Capital also initiated a $18.2 million position during the quarter. The other funds with new positions in the stock are Steven Boyd’s Armistice Capital, Greg Eisner’s Engineers Gate Manager, and Ken Griffin’s Citadel Investment Group.
Let’s check out hedge fund activity in other stocks similar to Korn Ferry (NYSE:KFY). We will take a look at ProAssurance Corporation (NYSE:PRA), Silicon Motion Technology Corp. (NASDAQ:SIMO), Comfort Systems USA, Inc. (NYSE:FIX), and PagerDuty, Inc. (NYSE:PD). This group of stocks’ market valuations resemble KFY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRA | 10 | 124328 | -8 |
| SIMO | 18 | 214067 | 1 |
| FIX | 20 | 71526 | -4 |
| PD | 25 | 54152 | 10 |
| Average | 18.25 | 116018 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $116 million. That figure was $136 million in KFY’s case. PagerDuty, Inc. (NYSE:PD) is the most popular stock in this table. On the other hand ProAssurance Corporation (NYSE:PRA) is the least popular one with only 10 bullish hedge fund positions. Korn Ferry (NYSE:KFY) is not the most popular stock in this group but hedge fund interest is still above average. 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 12.2% in 2020 through June 17th but still beat the market by 14.8 percentage points. Hedge funds were also right about betting on KFY as the stock returned 25.5% in Q2 (through June 17th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
