The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards KeyCorp (NYSE:KEY).
Is KeyCorp (NYSE:KEY) worth your attention right now? Investors who are in the know are in an optimistic mood. The number of long hedge fund bets increased by 5 recently. Our calculations also showed that KEY isn’t among the 30 most popular stocks among hedge funds.
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’ small-cap stock picks managed to the 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 market by 18 percentage points since May 2014 through December 3, 2018 (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.
We’re going to go over the new hedge fund action encompassing KeyCorp (NYSE:KEY).
How are hedge funds trading KeyCorp (NYSE:KEY)?
Heading into the fourth quarter of 2018, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from one quarter earlier. By comparison, 38 hedge funds held shares or bullish call options in KEY heading into this year. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
The largest stake in KeyCorp (NYSE:KEY) was held by Millennium Management, which reported holding $219.9 million worth of stock at the end of September. It was followed by Pzena Investment Management with a $140.3 million position. Other investors bullish on the company included Citadel Investment Group, Holocene Advisors, and Adage Capital Management.
Consequently, key hedge funds have jumped into KeyCorp (NYSE:KEY) headfirst. Holocene Advisors, managed by Brandon Haley, established the most outsized position in KeyCorp (NYSE:KEY). Holocene Advisors had $36 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $28 million position during the quarter. The following funds were also among the new KEY investors: Ian Simm’s Impax Asset Management, Anand Parekh’s Alyeska Investment Group, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s now take a look at hedge fund activity in other stocks similar to KeyCorp (NYSE:KEY). These stocks are ORIX Corporation (NYSE:IX), Rogers Communications Inc. (NYSE:RCI), PPL Corporation (NYSE:PPL), and Devon Energy Corp (NYSE:DVN). This group of stocks’ market caps are similar to KEY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IX | 6 | 6038 | 1 |
| RCI | 15 | 450839 | -1 |
| PPL | 24 | 936980 | 0 |
| DVN | 47 | 1545079 | 1 |
| Average | 23 | 735 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $735 million. That figure was $803 million in KEY’s case. Devon Energy Corp (NYSE:DVN) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 6 bullish hedge fund positions. KeyCorp (NYSE:KEY) 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. In this regard DVN might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
