We at Insider Monkey have gone over 887 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of KKR & Co Inc. (NYSE:KKR) based on that data.
IS KKR stock a buy or sell? KKR & Co Inc. (NYSE:KKR) investors should pay attention to an increase in support from the world’s most elite money managers of late. KKR & Co Inc. (NYSE:KKR) was in 54 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 56. Our calculations also showed that KKR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ric Dillon of Diamond Hill Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). Keeping this in mind we’re going to view the latest hedge fund action encompassing KKR & Co Inc. (NYSE:KKR).
Do Hedge Funds Think KKR Is A Good Stock To Buy Now?
At Q4’s end, a total of 54 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the third quarter of 2020. By comparison, 56 hedge funds held shares or bullish call options in KKR a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, ValueAct Capital held the most valuable stake in KKR & Co Inc. (NYSE:KKR), which was worth $1540.6 million at the end of the fourth quarter. On the second spot was Akre Capital Management which amassed $596.3 million worth of shares. Diamond Hill Capital, Egerton Capital Limited, and Alkeon Capital Management 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 Blacksheep Fund Management allocated the biggest weight to KKR & Co Inc. (NYSE:KKR), around 20.21% of its 13F portfolio. ValueAct Capital is also relatively very bullish on the stock, designating 17.87 percent of its 13F equity portfolio to KKR.
As one would reasonably expect, key money managers have jumped into KKR & Co Inc. (NYSE:KKR) headfirst. Two Sigma Advisors, managed by John Overdeck and David Siegel, assembled the biggest position in KKR & Co Inc. (NYSE:KKR). Two Sigma Advisors had $18.4 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $15.4 million investment in the stock during the quarter. The other funds with brand new KKR positions are Frank Fu’s CaaS Capital, Allon Hellmann’s Full18 Capital, and Donald Sussman’s Paloma Partners.
Let’s check out hedge fund activity in other stocks similar to KKR & Co Inc. (NYSE:KKR). These stocks are ViacomCBS Inc. (NASDAQ:VIAC), Ameriprise Financial, Inc. (NYSE:AMP), Old Dominion Freight Line (NASDAQ:ODFL), Garmin Ltd. (NASDAQ:GRMN), Ryanair Holdings plc (NASDAQ:RYAAY), FleetCor Technologies, Inc. (NYSE:FLT), and Coca-Cola European Partners plc (NYSE:CCEP). This group of stocks’ market values match KKR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VIAC | 44 | 919129 | 0 |
| AMP | 34 | 642947 | 5 |
| ODFL | 50 | 891260 | 3 |
| GRMN | 27 | 516357 | -5 |
| RYAAY | 23 | 782186 | 7 |
| FLT | 44 | 2029777 | 4 |
| CCEP | 28 | 1003000 | 5 |
| Average | 35.7 | 969237 | 2.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.7 hedge funds with bullish positions and the average amount invested in these stocks was $969 million. That figure was $4137 million in KKR’s case. Old Dominion Freight Line (NASDAQ:ODFL) is the most popular stock in this table. On the other hand Ryanair Holdings plc (NASDAQ:RYAAY) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks KKR & Co Inc. (NYSE:KKR) is more popular among hedge funds. Our overall hedge fund sentiment score for KKR is 87.9. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on KKR as the stock returned 19.4% since the end of December (through 3/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Kkr & Co. Inc. (NYSE:KKR)
Follow Kkr & Co. Inc. (NYSE:KKR)
Disclosure: None. This article was originally published at Insider Monkey.
