We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 835 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Kemper Corporation (NYSE:KMPR) in this article.
Is Kemper Corporation (NYSE:KMPR) a healthy stock for your portfolio? Hedge funds are reducing their bets on the stock. The number of long hedge fund bets went down by 1 in recent months. Our calculations also showed that KMPR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
If you’d ask most traders, hedge funds are perceived as worthless, old investment vehicles of the past. While there are over 8000 funds in operation today, Our experts look at the masters of this group, around 850 funds. It is estimated that this group of investors shepherd the majority of all hedge funds’ total asset base, and by observing their highest performing equity investments, Insider Monkey has revealed a few investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
David E. Shaw of D.E. Shaw
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s check out the recent hedge fund action encompassing Kemper Corporation (NYSE:KMPR).
How are hedge funds trading Kemper Corporation (NYSE:KMPR)?
At Q4’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KMPR over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Kemper Corporation (NYSE:KMPR) was held by Renaissance Technologies, which reported holding $19.9 million worth of stock at the end of September. It was followed by Marshall Wace LLP with a $16.9 million position. Other investors bullish on the company included D E Shaw, Citadel Investment Group, and AQR Capital Management. In terms of the portfolio weights assigned to each position 12th Street Asset Management allocated the biggest weight to Kemper Corporation (NYSE:KMPR), around 1.03% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, designating 0.55 percent of its 13F equity portfolio to KMPR.
Since Kemper Corporation (NYSE:KMPR) has witnessed falling interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of funds who sold off their full holdings by the end of the third quarter. At the top of the heap, Richard Chilton’s Chilton Investment Company dropped the largest position of the 750 funds monitored by Insider Monkey, comprising about $24.5 million in stock. Sander Gerber’s fund, Hudson Bay Capital Management, also dumped its stock, about $4.3 million worth. These moves are interesting, as total hedge fund interest fell by 1 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Kemper Corporation (NYSE:KMPR). We will take a look at First Horizon National Corporation (NYSE:FHN), GSX Techedu Inc. (NYSE:GSX), Calgon Carbon Corporation (NYSE:CCC), and Floor & Decor Holdings, Inc. (NYSE:FND). This group of stocks’ market values are closest to KMPR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FHN | 27 | 246677 | -7 |
| GSX | 10 | 86015 | 7 |
| CCC | 45 | 813021 | 7 |
| FND | 27 | 547579 | 3 |
| Average | 27.25 | 423323 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $423 million. That figure was $95 million in KMPR’s case. Calgon Carbon Corporation (NYSE:CCC) is the most popular stock in this table. On the other hand GSX Techedu Inc. (NYSE:GSX) is the least popular one with only 10 bullish hedge fund positions. Kemper Corporation (NYSE:KMPR) 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but still beat the market by 5.5 percentage points. A small number of hedge funds were also right about betting on KMPR as the stock returned -8.7% during the same time period and outperformed the market by an even larger margin.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
