We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards KKR & Co Inc. (NYSE:KKR) and determine whether hedge funds skillfully traded this stock.
Is KKR & Co Inc. (NYSE:KKR) an attractive investment now? The best stock pickers were in an optimistic mood. The number of long hedge fund bets improved by 2 in recent months. KKR & Co Inc. (NYSE:KKR) was in 56 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 56. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that KKR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to take a look at the recent hedge fund action surrounding KKR & Co Inc. (NYSE:KKR).
Jeffrey Ubben, Founder of ValueAct Capital and Inclusive Capital Partners
Do Hedge Funds Think KKR Is A Good Stock To Buy Now?
At third quarter’s end, a total of 56 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the previous quarter. On the other hand, there were a total of 50 hedge funds with a bullish position in KKR a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
Among these funds, ValueAct Capital held the most valuable stake in KKR & Co Inc. (NYSE:KKR), which was worth $1464.5 million at the end of the third quarter. On the second spot was Akre Capital Management which amassed $896.8 million worth of shares. Egerton Capital Limited, Ariel Investments, and Millennium 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 ValueAct Capital allocated the biggest weight to KKR & Co Inc. (NYSE:KKR), around 16.96% of its 13F portfolio. Blacksheep Fund Management is also relatively very bullish on the stock, designating 15.83 percent of its 13F equity portfolio to KKR.
Consequently, key money managers have jumped into KKR & Co Inc. (NYSE:KKR) headfirst. Renaissance Technologies, established the largest position in KKR & Co Inc. (NYSE:KKR). Renaissance Technologies had $18.2 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $6.1 million investment in the stock during the quarter. The other funds with brand new KKR positions are Jinghua Yan’s TwinBeech Capital, Daniel Johnson’s Gillson Capital, and D. E. Shaw’s D E Shaw.
Let’s now take a look at hedge fund activity in other stocks similar to KKR & Co Inc. (NYSE:KKR). These stocks are Otis Worldwide Corporation (NYSE:OTIS), AFLAC Incorporated (NYSE:AFL), The Hershey Company (NYSE:HSY), NatWest Group plc (NYSE:NWG), Welltower Inc. (NYSE:WELL), TransDigm Group Incorporated (NYSE:TDG), and Rockwell Automation Inc. (NYSE:ROK). This group of stocks’ market caps match KKR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OTIS | 46 | 2206787 | 1 |
| AFL | 34 | 223946 | 1 |
| HSY | 33 | 1274071 | -5 |
| NWG | 7 | 8068 | 2 |
| WELL | 22 | 508861 | 3 |
| TDG | 63 | 7188554 | 6 |
| ROK | 29 | 519693 | 4 |
| Average | 33.4 | 1704283 | 1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.4 hedge funds with bullish positions and the average amount invested in these stocks was $1704 million. That figure was $4652 million in KKR’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand NatWest Group plc (NYSE:NWG) is the least popular one with only 7 bullish hedge fund positions. KKR & Co Inc. (NYSE:KKR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KKR is 80.8. 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. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on KKR as the stock returned 17.1% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Kkr & Co. Inc. (NYSE:KKR)
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Disclosure: None. This article was originally published at Insider Monkey.
