Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Is Knoll Inc (NYSE:KNL) a marvelous investment at the moment? Investors who are in the know are unmistakably feeling that is not the case. The number of bullish hedge fund positions went down by 4 in recent months. KNL was in 16 hedge funds’ portfolios at the end of the third quarter of 2016. There were 20 hedge funds in our database with KNL holdings at the end of the second 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 Frontline Ltd (NYSE:FRO), Quotient Technology Inc(NYSE:QUOT), and Trade Desk Inc (NASDAQ:TTD) to gather more data points.
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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 Knoll Inc (NYSE:KNL)?
Heading into the fourth quarter of 2016, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 20% decline from the second quarter of 2016. On the other hand, there were a total of 12 hedge funds with a bullish position in KNL at the beginning of this year, so hedge fund ownership is still up by 33% in 2016. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Adage Capital Management, led by Phill Gross and Robert Atchinson, holds the number one position in Knoll Inc (NYSE:KNL). Adage Capital Management has a $10.5 million position in the stock. Sitting at the No. 2 spot is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, which holds an $8.2 million position. Remaining professional money managers that are bullish consist of David E. Shaw’s D E Shaw, Millennium Management, one of the 10 largest hedge funds in the world, and Cliff Asness’ AQR 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-micro-cap stocks.
Judging by the fact that Knoll Inc (NYSE:KNL) has gone through a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there were a few funds who were dropping their entire stakes by the end of the third quarter. Interestingly, Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital cashed in the largest investment of all the hedgies studied by Insider Monkey, comprising close to $10.9 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund cut about $3.3 million worth of shares.
Let’s now take a look at hedge fund activity in other stocks similar to Knoll Inc (NYSE:KNL). We will take a look at Frontline Ltd (NYSE:FRO), Quotient Technology Inc(NYSE:QUOT), Trade Desk Inc (NASDAQ:TTD), and Multi Packaging Solutions Intrntnl Ltd (NYSE:MPSX). This group of stocks’ market caps match KNL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FRO | 9 | 8674 | -2 |
| QUOT | 15 | 41797 | 8 |
| TTD | 9 | 10656 | 9 |
| MPSX | 10 | 34161 | -7 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $48 million in KNL’s case. Quotient Technology Inc(NYSE:QUOT) is the most popular stock in this table. On the other hand Frontline Ltd (NYSE:FRO) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Knoll Inc (NYSE:KNL) 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.
Disclosure: None
