Here is What Hedge Funds Think About KeyCorp (KEY)

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on KeyCorp (NYSE:KEY).

Is KeyCorp (NYSE:KEY) a buy here? Investors who are in the know were in an optimistic mood. The number of bullish hedge fund bets advanced by 12 recently. KeyCorp (NYSE:KEY) was in 41 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 46. Our calculations also showed that KEY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 29 hedge funds in our database with KEY holdings at the end of December.

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 115 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.

Robert Atchinson of Adage Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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. With all of this in mind we’re going to check out the recent hedge fund action surrounding KeyCorp (NYSE:KEY).

Do Hedge Funds Think KEY Is A Good Stock To Buy Now?

At Q1’s end, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of 41% from the previous quarter. On the other hand, there were a total of 43 hedge funds with a bullish position in KEY a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Millennium Management was the largest shareholder of KeyCorp (NYSE:KEY), with a stake worth $72.9 million reported as of the end of March. Trailing Millennium Management was Pzena Investment Management, which amassed a stake valued at $70.6 million. Adage Capital Management, Citadel Investment Group, and Balyasny Asset Management 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 Elizabeth Park Capital Management allocated the biggest weight to KeyCorp (NYSE:KEY), around 3.32% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, earmarking 2.52 percent of its 13F equity portfolio to KEY.

Consequently, key money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the most outsized position in KeyCorp (NYSE:KEY). Balyasny Asset Management had $40 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $18.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Noam Gottesman’s GLG Partners, Gregg Moskowitz’s Interval Partners, and Cliff Asness’s AQR Capital Management.

Let’s check out hedge fund activity in other stocks similar to KeyCorp (NYSE:KEY). These stocks are Hologic, Inc. (NASDAQ:HOLX), ZoomInfo Technologies Inc. (NASDAQ:ZI), Halliburton Company (NYSE:HAL), DISH Network Corp. (NASDAQ:DISH), Xylem Inc (NYSE:XYL), StoneCo Ltd. (NASDAQ:STNE), and The Cooper Companies, Inc. (NYSE:COO). All of these stocks’ market caps match KEY’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.3 hedge funds with bullish positions and the average amount invested in these stocks was $1206 million. That figure was $565 million in KEY’s case. DISH Network Corp. (NASDAQ:DISH) is the most popular stock in this table. On the other hand Xylem Inc (NYSE:XYL) is the least popular one with only 23 bullish hedge fund positions. KeyCorp (NYSE:KEY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KEY is 68.9. 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. 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 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 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately KEY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on KEY were disappointed as the stock returned 0.5% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.