You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Is iKang Healthcare Group Inc (ADR) (NASDAQ:KANG) a cheap investment today? Prominent investors are indeed getting more optimistic. The number of long hedge fund investments strengthened by 2 recently. KANG was in 12 hedge funds’ portfolios at the end of the third quarter of 2016. There were 10 hedge funds in our database with KANG holdings at the end of the previous quarter. 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 Foundation Medicine Inc (NASDAQ:FMI), Independent Bank Group Inc (NASDAQ:IBTX), and Apptio Inc (NASDAQ:APTI) to gather more data points.
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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With all of this in mind, we’re going to view the recent action encompassing iKang Healthcare Group Inc (ADR) (NASDAQ:KANG).
How are hedge funds trading iKang Healthcare Group Inc (ADR) (NASDAQ:KANG)?
Heading into the fourth quarter of 2016, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in KANG over the last 5 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Daniel Gold’s QVT Financial has the most valuable position in iKang Healthcare Group Inc (ADR) (NASDAQ:KANG), worth close to $20.2 million. The second largest stake is held by Noam Gottesman of GLG Partners, with a $19.8 million position. Remaining professional money managers that hold long positions contain Robert Emil Zoellner’s Alpine Associates, Fang Zheng’s Keywise Capital Management and Jim Simons’ Renaissance Technologies which is one of the largest hedge funds in the world. We should note that none of these hedge funds are 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.
Now, key money managers have been driving this bullishness. Cliff Asness’ AQR Capital Management created the largest position in iKang Healthcare Group Inc (ADR) (NASDAQ:KANG). AQR Capital Management had $0.5 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.5 million investment in the stock during the quarter. The following funds were also among the new KANG investors: Citadel Investment Group and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as iKang Healthcare Group Inc (ADR) (NASDAQ:KANG) but similarly valued. These stocks are Foundation Medicine Inc (NASDAQ:FMI), Independent Bank Group Inc (NASDAQ:IBTX), Apptio Inc (NASDAQ:APTI), and Meridian Bioscience, Inc. (NASDAQ:VIVO). This group of stocks’ market caps are similar to KANG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FMI | 11 | 28333 | 3 |
| IBTX | 9 | 27629 | -3 |
| APTI | 14 | 10673 | 14 |
| VIVO | 16 | 61352 | -3 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $63 million in KANG’s case. Meridian Bioscience, Inc. (NASDAQ:VIVO) is the most popular stock in this table. On the other hand Independent Bank Group Inc (NASDAQ:IBTX) is the least popular one with only 9 bullish hedge fund positions. iKang Healthcare Group Inc (ADR) (NASDAQ:KANG) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard VIVO might be a better candidate to consider taking a long position in.
Disclosure: None
