Between June 25 and October 30th the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of KLX Inc (NASDAQ:KLXI) and see how the stock is affected by the recent hedge fund activity.
KLX Inc (NASDAQ:KLXI) was in 34 hedge funds’ portfolios at the end of September. KLX Inc (NASDAQ:KLXI) has seen a decrease in hedge fund interest in recent months. There were 36 hedge funds in our database with KLX Inc (NASDAQ:KLXI) holdings 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 FleetMatics Group PLC (NYSE:FLTX), Teekay LNG Partners L.P. (NYSE:TGP), and InterXion Holding NV (NYSE:INXN) to gather more data points.
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To the average investor, there are a lot of tools stock traders have at their disposal to value their holdings. Two of the most useful tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best hedge fund managers can trounce their index-focused peers by a healthy margin (see the details here).
With all of this in mind, we’re going to take a look at the latest action encompassing KLX Inc (NASDAQ:KLXI).
Hedge fund activity in KLX Inc (NASDAQ:KLXI)
At the end of the third quarter, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 6% from the second quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Farallon Capital holds the number one position in KLX Inc (NASDAQ:KLXI). Farallon Capital has a $141.5 million position in the stock, comprising 1.9% of its 13F portfolio. The second largest stake is held by Southpoint Capital Advisors, managed by John Smith Clark, which holds a $75.1 million position; 3.4% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions encompass Jeffrey Gates’s Gates Capital Management, Seth Klarman’s Baupost Group, and Youlia Miteva’s Proxima Capital Management.
Due to the fact that KLX Inc (NASDAQ:KLXI) has faced a bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of money managers that slashed their full holdings in the third quarter. It’s worth mentioning that Dinakar Singh’s TPG-AXON Management LP dropped the biggest position of all the hedgies monitored by Insider Monkey, worth about $49.5 million in stock. Gordy Holterman and Derek Dunn’s fund, Overland Advisors, also said goodbye to its stock, about $23.2 million worth of shares. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let’s go over hedge fund activity in other stocks similar to KLX Inc (NASDAQ:KLXI). These stocks are FleetMatics Group PLC (NYSE:FLTX), Teekay LNG Partners L.P. (NYSE:TGP), InterXion Holding NV (NYSE:INXN), and Pegasystems Inc. (NASDAQ:PEGA). This group of stocks’ market caps are similar to KLX Inc (NASDAQ:KLXI)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FLTX | 13 | 68660 | 1 |
| TGP | 7 | 13512 | 1 |
| INXN | 31 | 881807 | -6 |
| PEGA | 18 | 138052 | 1 |
As you can see, these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $276 million. That figure was $692 million in KLX Inc (NASDAQ:KLXI)’s case. InterXion Holding NV (NYSE:INXN) is the most popular stock in this table. On the other hand, Teekay LNG Partners L.P. (NYSE:TGP) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks, KLX Inc (NASDAQ:KLXI) 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.
