Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like KeyCorp (NYSE:KEY).
Is KeyCorp (NYSE:KEY) a buy, sell, or hold? Hedge funds are becoming less confident, as the number of long hedge fund positions shrunk by four in the third quarter. In this way, the company was in 42 hedge funds’ portfolios 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 Interpublic Group of Companies Inc (NYSE:IPG), Lincoln National Corporation (NYSE:LNC), and Wynn Resorts, Limited (NASDAQ:WYNN) to gather more data points.
Follow Keycorp W (NYSE:KEY)
Follow Keycorp W (NYSE:KEY)
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 check out the fresh action surrounding KeyCorp (NYSE:KEY).
What have hedge funds been doing with KeyCorp (NYSE:KEY)?
During the third quarter, the number of investors tracked by Insider Monkey that were long KeyCorp inched down by 9% to 42. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Israel Englander’s Millennium Management, one of the 10 largest hedge funds in the world holds the biggest position in KeyCorp (NYSE:KEY). Millennium Management has a $116.2 million position in the stock. On Millennium Management’s heels is Richard S. Pzena’s Pzena Investment Management, with a $91.1 million position. Remaining professional money managers with similar optimism comprise Anand Parekh’s Alyeska Investment Group, Jim Simons’ Renaissance Technologies, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Because KeyCorp (NYSE:KEY) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of funds that decided to sell off their entire stakes during the third quarter. Interestingly, John Khoury’s Long Pond Capital said goodbye to the largest investment of all the hedgies watched by Insider Monkey, comprising an estimated $57.6 million in stock. Robert Pohly’s fund, Samlyn Capital, also said goodbye to its stock, about $42.8 million worth.
Let’s go over hedge fund activity in other stocks similar to KeyCorp (NYSE:KEY). We will take a look at Interpublic Group of Companies Inc (NYSE:IPG), Lincoln National Corporation (NYSE:LNC), Wynn Resorts, Limited (NASDAQ:WYNN), and Duke Realty Corp (NYSE:DRE). This group of stocks’ market valuations resemble KEY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IPG | 31 | 1267574 | -4 |
| LNC | 24 | 668282 | 0 |
| WYNN | 38 | 2245380 | 8 |
| DRE | 11 | 44166 | 1 |
As you can see these stocks had an average of 26 investors with long positions and the average amount invested in these stocks was $1.06 billion. That figure was $728 million in KEY’s case. Wynn Resorts, Limited (NASDAQ:WYNN) is the most popular stock in this table with 38 funds holding shares. On the other hand Duke Realty Corp (NYSE:DRE) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks KeyCorp (NYSE:KEY) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
