Is Kirkland’s, Inc. (KIRK) Worthy of Your Portfolio?

Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

Kirkland’s, Inc. (NASDAQ:KIRK) shareholders have witnessed a decrease in hedge fund sentiment of late. KIRK was in 11 hedge funds’ portfolios at the end of the third quarter of 2016. There were 12 hedge funds in our database with KIRK positions at the end of the previous quarter. 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 HC2 Holdings Inc (NYSEMKT:HCHC), Sterling Construction Company, Inc. (NASDAQ:STRL), and Lifetime Brands Inc (NASDAQ:LCUT) to gather more data points.

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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How have hedgies been trading Kirkland’s, Inc. (NASDAQ:KIRK)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, down by 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in KIRK over the last 5 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Nokomis Capital, led by Brett Hendrickson, holds the largest position in Kirkland’s, Inc. (NASDAQ:KIRK). Nokomis Capital has a $19 million position in the stock, comprising 4.1% of its 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, led by Chuck Royce, which holds a $17.5 million position. Some other members of the smart money that hold long positions contain Renaissance Technologies, one of the largest hedge funds in the world, Paul Hondros’ AlphaOne Capital Partners and Brandon Osten’s Venator 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.