A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Kinder Morgan Inc (NYSE:KMI).
Is KMI stock a buy or sell? Kinder Morgan Inc (NYSE:KMI) was in 42 hedge funds’ portfolios at the end of December. The all time high for this statistic is 72. KMI has experienced a decrease in hedge fund sentiment recently. There were 46 hedge funds in our database with KMI holdings at the end of September. Our calculations also showed that KMI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Today there are many indicators investors put to use to grade stocks. A pair of the less utilized indicators are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite fund managers can outperform their index-focused peers by a solid margin (see the details here).
David Abrams of Abrams Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. Keeping this in mind we’re going to take a look at the recent hedge fund action encompassing Kinder Morgan Inc (NYSE:KMI).
Do Hedge Funds Think KMI Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the third quarter of 2020. On the other hand, there were a total of 40 hedge funds with a bullish position in KMI a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Among these funds, FPR Partners held the most valuable stake in Kinder Morgan Inc (NYSE:KMI), which was worth $269.7 million at the end of the fourth quarter. On the second spot was First Pacific Advisors LLC which amassed $178.4 million worth of shares. Abrams Capital Management, Two Sigma Advisors, and D E Shaw 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 FPR Partners allocated the biggest weight to Kinder Morgan Inc (NYSE:KMI), around 7.94% of its 13F portfolio. Quaker Capital Investments is also relatively very bullish on the stock, earmarking 5.12 percent of its 13F equity portfolio to KMI.
Judging by the fact that Kinder Morgan Inc (NYSE:KMI) has faced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there were a few hedgies who sold off their entire stakes by the end of the fourth quarter. Intriguingly, Clint Carlson’s Carlson Capital sold off the largest stake of the “upper crust” of funds watched by Insider Monkey, worth about $2.8 million in stock. Ben Levine, Andrew Manuel and Stefan Renold’s fund, LMR Partners, also cut its stock, about $1.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 4 funds by the end of the fourth quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Kinder Morgan Inc (NYSE:KMI). These stocks are Prudential Financial Inc (NYSE:PRU), Hilton Worldwide Holdings Inc (NYSE:HLT), ResMed Inc. (NYSE:RMD), Republic Services, Inc. (NYSE:RSG), QuantumScape Corporation (NYSE:QS), Zillow Group Inc (NASDAQ:Z), and LyondellBasell Industries NV (NYSE:LYB). This group of stocks’ market values are closest to KMI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRU | 36 | 532348 | 2 |
| HLT | 60 | 6029309 | 3 |
| RMD | 27 | 355462 | -8 |
| RSG | 36 | 1099427 | -1 |
| QS | 35 | 1848564 | 35 |
| Z | 83 | 5812175 | 14 |
| LYB | 27 | 682905 | -4 |
| Average | 43.4 | 2337170 | 5.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 43.4 hedge funds with bullish positions and the average amount invested in these stocks was $2337 million. That figure was $1031 million in KMI’s case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand ResMed Inc. (NYSE:RMD) is the least popular one with only 27 bullish hedge fund positions. Kinder Morgan Inc (NYSE:KMI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KMI is 31.9. 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 gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. A small number of hedge funds were also right about betting on KMI as the stock returned 18.6% since the end of the fourth quarter (through 3/19) and outperformed the market by an even larger margin.
Follow Kinder Morgan Inc. (NYSE:KMI)
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Disclosure: None. This article was originally published at Insider Monkey.
