In this article you are going to find out whether hedge funds think Kearny Financial Corp. (NASDAQ:KRNY) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Kearny Financial Corp. (NASDAQ:KRNY) a good investment right now? Money managers are reducing their bets on the stock. The number of long hedge fund positions were cut by 6 in recent months. Our calculations also showed that KRNY 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). KRNY was in 15 hedge funds’ portfolios at the end of the first quarter of 2020. There were 21 hedge funds in our database with KRNY positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a glance at the key hedge fund action regarding Kearny Financial Corp. (NASDAQ:KRNY).
How are hedge funds trading Kearny Financial Corp. (NASDAQ:KRNY)?
At the end of the first quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in KRNY a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Kearny Financial Corp. (NASDAQ:KRNY) was held by Renaissance Technologies, which reported holding $50.7 million worth of stock at the end of September. It was followed by Castine Capital Management with a $7.3 million position. Other investors bullish on the company included Prospector Partners, Ancora Advisors, and Winton Capital Management. In terms of the portfolio weights assigned to each position Castine Capital Management allocated the biggest weight to Kearny Financial Corp. (NASDAQ:KRNY), around 4.01% of its 13F portfolio. Swift Run Capital Management is also relatively very bullish on the stock, dishing out 1.97 percent of its 13F equity portfolio to KRNY.
Seeing as Kearny Financial Corp. (NASDAQ:KRNY) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there is a sect of funds that decided to sell off their entire stakes by the end of the first quarter. At the top of the heap, Richard Driehaus’s Driehaus Capital cut the biggest position of all the hedgies followed by Insider Monkey, worth about $7.7 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund said goodbye to about $0.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 6 funds by the end of the first quarter.
Let’s go over hedge fund activity in other stocks similar to Kearny Financial Corp. (NASDAQ:KRNY). We will take a look at Omeros Corporation (NASDAQ:OMER), Heritage Financial Corporation (NASDAQ:HFWA), Aprea Therapeutics, Inc. (NASDAQ:APRE), and Applied Therapeutics, Inc. (NASDAQ:APLT). This group of stocks’ market caps are similar to KRNY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OMER | 9 | 125041 | 2 |
| HFWA | 6 | 12043 | 0 |
| APRE | 6 | 159769 | 1 |
| APLT | 16 | 173748 | 9 |
| Average | 9.25 | 117650 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $75 million in KRNY’s case. Applied Therapeutics, Inc. (NASDAQ:APLT) is the most popular stock in this table. On the other hand Heritage Financial Corporation (NASDAQ:HFWA) is the least popular one with only 6 bullish hedge fund positions. Kearny Financial Corp. (NASDAQ:KRNY) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately KRNY wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on KRNY were disappointed as the stock returned -8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
