It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Eastman Kodak Co. (NYSE:KODK).
Is Eastman Kodak Co. (NYSE:KODK) undervalued? It looks like investors who are in the know are getting more optimistic. The number of long hedge fund positions went up by three last quarter. In this way, 14 funds from our database held shares of Eastman Kodak at the end of September. However, the level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Winnebago Industries, Inc. (NYSE:WGO), Aimmune Therapeutics Inc (NASDAQ:AIMT), and Dime Community Bancshares, Inc. (NASDAQ:DCOM) to gather more data points.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, we’re going to review the fresh action encompassing Eastman Kodak Co. (NYSE:KODK).
How are hedge funds trading Eastman Kodak Co. (NYSE:KODK)?
Heading into the fourth quarter of 2016, a total of 14 of the hedge funds tracked by Insider Monkey were long Eastman Kodak, up by 27% over the quarter. The graph below displays the number of hedge funds with bullish position in KODK over the last five quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Blue Mountain Capital, led by Andrew Feldstein and Stephen Siderow, holds the biggest position in Eastman Kodak Co. (NYSE:KODK). Blue Mountain Capital has a $111.7 million position in the stock, comprising 2.6% of its 13F portfolio. Sitting at the No. 2 spot is Jon Bauer’s Contrarian Capital, with a $25.1 million position; the fund has 11.9% of its 13F portfolio invested in the stock.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Southeastern Asset Management, led by Mason Hawkins, initiated the largest position in Eastman Kodak Co. (NYSE:KODK). Southeastern Asset Management had $6.4 million invested in the company at the end of the quarter. Cliff Asness’ AQR Capital Management also made a $1.2 million investment in the stock during the quarter. The other funds with brand new KODK positions are D. E. Shaw’s D E Shaw, Ken Griffin’s Citadel Investment Group, and Paul Tudor Jones’ Tudor Investment Corp. We should note that Southeastern Asset Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Let’s now take a look at hedge fund activity in other stocks similar to Eastman Kodak Co. (NYSE:KODK). These stocks are Winnebago Industries, Inc. (NYSE:WGO), Aimmune Therapeutics Inc (NASDAQ:AIMT), Dime Community Bancshares, Inc. (NASDAQ:DCOM), and Richmont Mines Inc. (USA) (NYSEAMEX:RIC). All of these stocks’ market caps match KODK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WGO | 14 | 88664 | 1 |
| AIMT | 9 | 102623 | -2 |
| DCOM | 8 | 33018 | 0 |
| RIC | 9 | 74547 | 0 |
As you can see these stocks had an average of 10 investors with bullish positions and the average amount invested in these stocks was $75 million, versus $155 million in KODK’s case. Winnebago Industries, Inc. (NYSE:WGO) is the most popular stock in this table. On the other hand Dime Community Bancshares, Inc. (NASDAQ:DCOM) is the least popular one with only eight funds holding shares. Eastman Kodak Co. (NYSE:KODK) 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 WGO might be a better candidate to consider taking a long position in.
Disclosure: none
