Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the second quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 20 stock picks outperformed the S&P 500 Index by 6.6 percentage points through May 30th. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Kronos Worldwide, Inc. (NYSE:KRO) investors should be aware of a decrease in activity from the world’s largest hedge funds of late. KRO was in 13 hedge funds’ portfolios at the end of the first quarter of 2019. There were 14 hedge funds in our database with KRO positions at the end of the previous quarter. Our calculations also showed that KRO isn’t among the 30 most popular stocks among hedge funds.
To the average investor there are tons of gauges stock market investors put to use to assess publicly traded companies. Some of the most useful gauges are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top fund managers can outclass the S&P 500 by a solid amount (see the details here).
We’re going to take a peek at the key hedge fund action encompassing Kronos Worldwide, Inc. (NYSE:KRO).
What does smart money think about Kronos Worldwide, Inc. (NYSE:KRO)?
Heading into the second quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in KRO 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.
More specifically, Renaissance Technologies was the largest shareholder of Kronos Worldwide, Inc. (NYSE:KRO), with a stake worth $21.2 million reported as of the end of March. Trailing Renaissance Technologies was Point72 Asset Management, which amassed a stake valued at $7.6 million. Arrowstreet Capital, Citadel Investment Group, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.
Because Kronos Worldwide, Inc. (NYSE:KRO) has experienced bearish sentiment from hedge fund managers, logic holds that there lies a certain “tier” of funds that elected to cut their full holdings last quarter. At the top of the heap, Noam Gottesman’s GLG Partners dumped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, valued at about $1.9 million in stock. Brandon Haley’s fund, Holocene Advisors, also dumped its stock, about $0.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Kronos Worldwide, Inc. (NYSE:KRO). These stocks are IAMGOLD Corporation (NYSE:IAG), Arco Platform Limited (NASDAQ:ARCE), Badger Meter, Inc. (NYSE:BMI), and Tronox Holdings plc (NYSE:TROX). This group of stocks’ market values are similar to KRO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IAG | 13 | 148633 | -1 |
| ARCE | 11 | 40688 | 1 |
| BMI | 14 | 117027 | 2 |
| TROX | 24 | 225222 | -2 |
| Average | 15.5 | 132893 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $44 million in KRO’s case. Tronox Holdings plc (NYSE:TROX) is the most popular stock in this table. On the other hand Arco Platform Limited (NASDAQ:ARCE) is the least popular one with only 11 bullish hedge fund positions. Kronos Worldwide, Inc. (NYSE:KRO) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on KRO as the stock returned 8.5% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
