In this article we will analyze whether Kilroy Realty Corp (NYSE:KRC) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Kilroy Realty Corp (NYSE:KRC) was in 24 hedge funds’ portfolios at the end of September. The all time high for this statistic is 27. KRC investors should be aware of a decrease in hedge fund sentiment recently. There were 26 hedge funds in our database with KRC holdings at the end of June. Our calculations also showed that KRC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Howard Marks of Oaktree Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s take a look at the fresh hedge fund action surrounding Kilroy Realty Corp (NYSE:KRC).
Do Hedge Funds Think KRC Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in KRC a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Zimmer Partners was the largest shareholder of Kilroy Realty Corp (NYSE:KRC), with a stake worth $122.5 million reported as of the end of September. Trailing Zimmer Partners was Oaktree Capital Management, which amassed a stake valued at $101.6 million. Long Pond Capital, AQR Capital Management, and Schonfeld Strategic Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Masterton Capital Management allocated the biggest weight to Kilroy Realty Corp (NYSE:KRC), around 2.51% of its 13F portfolio. Zimmer Partners is also relatively very bullish on the stock, earmarking 1.93 percent of its 13F equity portfolio to KRC.
Because Kilroy Realty Corp (NYSE:KRC) has faced falling interest from hedge fund managers, we can see that there exists a select few fund managers who sold off their positions entirely in the third quarter. Interestingly, Chris Hohn’s TCI Fund Management cut the biggest investment of the “upper crust” of funds tracked by Insider Monkey, valued at an estimated $8.4 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund sold off about $4.6 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Kilroy Realty Corp (NYSE:KRC) but similarly valued. These stocks are Apartment Income REIT Corp. (NYSE:AIRC), Lincoln Electric Holdings, Inc. (NASDAQ:LECO), Advanced Drainage Systems Inc. (NYSE:WMS), Brooks Automation, Inc. (NASDAQ:BRKS), Americold Realty Trust (NYSE:COLD), National Retail Properties, Inc. (NYSE:NNN), and Endava plc (NYSE:DAVA). This group of stocks’ market valuations are closest to KRC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AIRC | 17 | 270935 | 3 |
| LECO | 21 | 288792 | 1 |
| WMS | 21 | 1092988 | -5 |
| BRKS | 29 | 577566 | -3 |
| COLD | 15 | 93728 | -1 |
| NNN | 21 | 120081 | 2 |
| DAVA | 16 | 282010 | 0 |
| Average | 20 | 389443 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $389 million. That figure was $423 million in KRC’s case. Brooks Automation, Inc. (NASDAQ:BRKS) is the most popular stock in this table. On the other hand Americold Realty Trust (NYSE:COLD) is the least popular one with only 15 bullish hedge fund positions. Kilroy Realty Corp (NYSE:KRC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KRC is 61.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately KRC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on KRC were disappointed as the stock returned 2.6% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Kilroy Realty Corp (NYSE:NYSE: KRC)
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Disclosure: None. This article was originally published at Insider Monkey.
