Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Kimbell Royalty Partners (NYSE:KRP).
Kimbell Royalty Partners (NYSE:KRP) was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 9. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. KRP has experienced an increase in hedge fund interest lately. There were 6 hedge funds in our database with KRP holdings at the end of March. Our calculations also showed that KRP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ken Griffin of Citadel Investment Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a look at the new hedge fund action regarding Kimbell Royalty Partners (NYSE:KRP).
Do Hedge Funds Think KRP Is A Good Stock To Buy Now?
At second quarter’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in KRP over the last 24 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in Kimbell Royalty Partners (NYSE:KRP) was held by Mill Road Capital Management, which reported holding $7.1 million worth of stock at the end of June. It was followed by Nokomis Capital with a $5.1 million position. Other investors bullish on the company included Renaissance Technologies, Marshall Wace LLP, and Horizon Asset Management. In terms of the portfolio weights assigned to each position Mill Road Capital Management allocated the biggest weight to Kimbell Royalty Partners (NYSE:KRP), around 2.39% of its 13F portfolio. Nokomis Capital is also relatively very bullish on the stock, setting aside 1.95 percent of its 13F equity portfolio to KRP.
Consequently, specific money managers have jumped into Kimbell Royalty Partners (NYSE:KRP) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most valuable position in Kimbell Royalty Partners (NYSE:KRP). Marshall Wace LLP had $1.4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $1.1 million investment in the stock during the quarter. The other funds with brand new KRP positions are Israel Englander’s Millennium Management and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Kimbell Royalty Partners (NYSE:KRP) but similarly valued. We will take a look at Trean Insurance Group, Inc. (NASDAQ:TIG), BioTime, Inc. (NYSE:BTX), Horizon Bancorp (NASDAQ:HBNC), Grid Dynamics Holdings, Inc. (NASDAQ:GDYN), Atossa Genetics Inc. (NASDAQ:ATOS), Xenon Pharmaceuticals Inc (NASDAQ:XENE), and QCR Holdings, Inc. (NASDAQ:QCRH). This group of stocks’ market valuations are similar to KRP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TIG | 10 | 58176 | -1 |
| BTX | 1 | 718 | -1 |
| HBNC | 10 | 12852 | 2 |
| GDYN | 15 | 41366 | 3 |
| ATOS | 5 | 19224 | -1 |
| XENE | 28 | 413577 | 1 |
| QCRH | 15 | 80942 | 2 |
| Average | 12 | 89551 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $21 million in KRP’s case. Xenon Pharmaceuticals Inc (NASDAQ:XENE) is the most popular stock in this table. On the other hand BioTime, Inc. (NYSE:BTX) is the least popular one with only 1 bullish hedge fund positions. Kimbell Royalty Partners (NYSE:KRP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KRP is 55.7. 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. 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 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. A small number of hedge funds were also right about betting on KRP as the stock returned 14.8% since the end of the second quarter (through 9/27) and outperformed the market by an even larger margin.
Follow Kimbell Royalty Partners Lp (NYSE:KRP)
Follow Kimbell Royalty Partners Lp (NYSE:KRP)
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Disclosure: None. This article was originally published at Insider Monkey.
