We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Kaleyra, Inc. (NASDAQ:KLR) based on that data.
Kaleyra, Inc. (NASDAQ:KLR) was in 7 hedge funds’ portfolios at the end of the first quarter of 2020. KLR investors should pay attention to an increase in hedge fund interest of late. There were 5 hedge funds in our database with KLR positions at the end of the previous quarter. Our calculations also showed that KLR 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Paul Glazer of Glazer Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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 go over the key hedge fund action surrounding Kaleyra, Inc. (NASDAQ:KLR).
How have hedgies been trading Kaleyra, Inc. (NASDAQ:KLR)?
At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40% from the fourth quarter of 2019. On the other hand, there were a total of 6 hedge funds with a bullish position in KLR a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Israel Englander’s Millennium Management has the biggest call position in Kaleyra, Inc. (NASDAQ:KLR), worth close to $14.4 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Paul Glazer of Glazer Capital, with a $9.1 million position; 0.6% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism contain Scott Stewart Miller’s Greenhaven Road Investment Management, Scott Stewart Miller’s Greenhaven Road Investment Management and Will Graves’s Boardman Bay Capital Management. In terms of the portfolio weights assigned to each position Greenhaven Road Investment Management allocated the biggest weight to Kaleyra, Inc. (NASDAQ:KLR), around 6.41% of its 13F portfolio. Greenhaven Road Investment Management is also relatively very bullish on the stock, setting aside 2.21 percent of its 13F equity portfolio to KLR.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Greenhaven Road Investment Management, managed by Scott Stewart Miller, initiated the largest position in Kaleyra, Inc. (NASDAQ:KLR). Greenhaven Road Investment Management had $5.1 million invested in the company at the end of the quarter. Scott Stewart Miller’s Greenhaven Road Investment Management also made a $1.8 million investment in the stock during the quarter. The other funds with brand new KLR positions are Chuck Royce’s Royce & Associates and Israel Englander’s Millennium Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Kaleyra, Inc. (NASDAQ:KLR) but similarly valued. We will take a look at WhiteHorse Finance, Inc. (NASDAQ:WHF), Metalla Royalty & Streaming Ltd. (NYSE:MTA), NL Industries, Inc. (NYSE:NL), and Monroe Capital Corp (NASDAQ:MRCC). This group of stocks’ market caps resemble KLR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WHF | 5 | 3136 | -3 |
| MTA | 1 | 518 | 1 |
| NL | 3 | 738 | 0 |
| MRCC | 4 | 2273 | -1 |
| Average | 3.25 | 1666 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.25 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $17 million in KLR’s case. WhiteHorse Finance, Inc. (NASDAQ:WHF) is the most popular stock in this table. On the other hand Metalla Royalty & Streaming Ltd. (NYSE:MTA) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Kaleyra, Inc. (NASDAQ:KLR) is more popular among hedge funds. 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. Unfortunately KLR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on KLR were disappointed as the stock returned -16.6% during the second quarter (through June 10th) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.