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 Kinsale Capital Group Inc (NASDAQ:KNSL).
Is Kinsale Capital Group Inc (NASDAQ:KNSL) a superb stock to buy now? The best stock pickers are undeniably taking a bullish view. The number of long hedge fund bets went up by 6 lately. KNSL was in 6 hedge funds’ portfolios at the end of September. There were 0 hedge funds in our database with KNSL holdings at the end of the previous quarter. At the end of this article we will also compare KNSL to other stocks including Net 1 UEPS Technologies Inc (NASDAQ:UEPS), Haynes International, Inc. (NASDAQ:HAYN), and NACCO Industries, Inc. (NYSE:NC) to get a better sense of its popularity.
Follow Kinsale Capital Group Inc. (NASDAQ:KNSL)
Follow Kinsale Capital Group Inc. (NASDAQ:KNSL)
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, let’s analyze the key action regarding Kinsale Capital Group Inc (NASDAQ:KNSL).
How have hedgies been trading Kinsale Capital Group Inc (NASDAQ:KNSL)?
Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, whereas none of the funds had this stock in their portfolios just one quarter before. Below, you can check out the change in hedge fund sentiment towards KNSL over the last 5 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Ira Unschuld’s Brant Point Investment Management has the biggest position in Kinsale Capital Group Inc (NASDAQ:KNSL), worth close to $5.1 million, comprising 0.4% of its total 13F portfolio. The second largest stake is held by Joshua Friedman and Mitchell Julis of Canyon Capital Advisors, who manage a $2.3 million position; 0.1% of its 13F portfolio is allocated to the company. Other peers with similar optimism encompass Mark Kingdon’s Kingdon Capital, Chuck Royce’s Royce & Associates and Benjamin A. Smith’s Laurion Capital Management. 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.
Since all hedge fund positions in Kinsale Capital Group Inc (NASDAQ:KNSL) were new, clearly Brant Point Investment Management and Canyon Capital Advisors established the biggest bets. Among the other bullish hedge funds, Mark Kingdon’s Kingdon Capital amassed $1.65 million worth of KNSL stock while Chuck Royce’s Royce & Associates built up a position that was worth $572,000 at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Kinsale Capital Group Inc (NASDAQ:KNSL). These stocks are Net 1 UEPS Technologies Inc (NASDAQ:UEPS), Haynes International, Inc. (NASDAQ:HAYN), NACCO Industries, Inc. (NYSE:NC), and Exar Corporation (NASDAQ:EXAR). This group of stocks’ market caps resemble KNSL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UEPS | 19 | 196031 | 1 |
| HAYN | 8 | 43566 | 1 |
| NC | 7 | 21384 | -2 |
| EXAR | 14 | 74142 | -1 |
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 $84 million. That figure was a meager $10 million in KNSL’s case. Net 1 UEPS Technologies Inc (NASDAQ:UEPS) is the most popular stock in this table. On the other hand NACCO Industries, Inc. (NYSE:NC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Kinsale Capital Group Inc (NASDAQ:KNSL) is even less popular than NC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None