Before we spend countless hours researching a company, we’d like to analyze what insiders, hedge funds and billionaire investors think of the stock first. We would like to do so 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 Kirkland Lake Gold Ltd. (NYSE:KL).
Kirkland Lake Gold Ltd. (NYSE:KL) investors should pay attention to an increase in activity from the world’s largest hedge funds lately. Overall hedge fund sentiment towards KL has never been this bullish. This is usually a bullish sign. For example hedge fund sentiment in Xilinx Inc. (XLNX) was also at its all time high at the beginning of this year and the stock returned more than 46% in 2.5 months. We observed similar performances from OKTA, Twilio, CCK, MSCI, MASI and Progressive Corporation (PGR); these stocks returned 37%, 37%, 35%, 29%, 28% and 27% respectively. Hedge fund sentiment towards IQVIA Holdings Inc. (IQV), Brookfield Asset Management (BAM), Atlassian Corporation (TEAM), RCL, MTB, VAR, RNG, FIVE, ECA, SBNY and CRH hit all time highs at the end of December, and all of these stocks returned more than 20% in the first 2.5-3 months of this year.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s go over the key hedge fund action surrounding Kirkland Lake Gold Ltd. (NYSE:KL).
What does the smart money think about Kirkland Lake Gold Ltd. (NYSE:KL)?
Heading into the first quarter of 2019, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the second quarter of 2018. By comparison, 15 hedge funds held shares or bullish call options in KL a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Polar Capital was the largest shareholder of Kirkland Lake Gold Ltd. (NYSE:KL), with a stake worth $58.9 million reported as of the end of September. Trailing Polar Capital was Arrowstreet Capital, which amassed a stake valued at $48.1 million. D E Shaw, Two Sigma Advisors, and Renaissance Technologies were also very fond of the stock, giving the stock large weights in their portfolios.
Now, key money managers have jumped into Kirkland Lake Gold Ltd. (NYSE:KL) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the most outsized position in Kirkland Lake Gold Ltd. (NYSE:KL). Arrowstreet Capital had $48.1 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also initiated a $3.9 million position during the quarter. The other funds with new positions in the stock are George Zweig, Shane Haas and Ravi Chander’s Signition LP, Mark Broach’s Manatuck Hill Partners, and Ronald Hua’s Qtron Investments.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Kirkland Lake Gold Ltd. (NYSE:KL) but similarly valued. We will take a look at Sealed Air Corporation (NYSE:SEE), Bio-Techne Corporation (NASDAQ:TECH), People’s United Financial, Inc. (NASDAQ:PBCT), and Charles River Laboratories International Inc. (NYSE:CRL). This group of stocks’ market valuations match KL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SEE | 31 | 941077 | 1 |
| TECH | 17 | 298051 | -1 |
| PBCT | 22 | 118312 | 2 |
| CRL | 28 | 699016 | 8 |
| Average | 24.5 | 514114 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $514 million. That figure was $258 million in KL’s case. Sealed Air Corporation (NYSE:SEE) is the most popular stock in this table. On the other hand Bio-Techne Corporation (NASDAQ:TECH) is the least popular one with only 17 bullish hedge fund positions. Kirkland Lake Gold Ltd. (NYSE:KL) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks among hedge funds returned 21.3% through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Hedge funds were also right about betting on KL as the stock returned 24.1% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
