We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Kellogg Company (NYSE:K) based on that data.
Kellogg Company (NYSE:K) has seen an increase in hedge fund interest of late. K was in 27 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 25 hedge funds in our database with K holdings at the end of the previous quarter. Our calculations also showed that K 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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s view the recent hedge fund action encompassing Kellogg Company (NYSE:K).
Hedge fund activity in Kellogg Company (NYSE:K)
At Q4’s end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in K over the last 14 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Kellogg Company (NYSE:K), which was worth $107.7 million at the end of the third quarter. On the second spot was Pzena Investment Management which amassed $56.7 million worth of shares. Moreover, Citadel Investment Group, GAMCO Investors, and Two Sigma Advisors were also bullish on Kellogg Company (NYSE:K), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, specific money managers were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most outsized position in Kellogg Company (NYSE:K). Marshall Wace LLP had $16.4 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $4.3 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Matthew Hulsizer’s PEAK6 Capital Management, and Andre F. Perold’s HighVista Strategies.
Let’s also examine hedge fund activity in other stocks similar to Kellogg Company (NYSE:K). We will take a look at Parker-Hannifin Corporation (NYSE:PH), Willis Towers Watson Public Limited Company (NASDAQ:WLTW), The Clorox Company (NYSE:CLX), and Waste Connections, Inc. (NYSE:WCN). This group of stocks’ market caps match K’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PH | 30 | 513662 | 3 |
| WLTW | 25 | 1442354 | -8 |
| CLX | 28 | 1026937 | 6 |
| WCN | 28 | 677487 | -2 |
| Average | 27.75 | 915110 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $915 million. That figure was $329 million in K’s case. Parker-Hannifin Corporation (NYSE:PH) is the most popular stock in this table. On the other hand Willis Towers Watson Public Limited Company (NASDAQ:WLTW) is the least popular one with only 25 bullish hedge fund positions. Kellogg Company (NYSE:K) 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. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately Kellogg wasn’t in this group. Hedge funds that bet on Kellogg were disappointed as the stock lost 3.6% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
