We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Kohl’s Corporation (NYSE:KSS).
Kohl’s Corporation (NYSE:KSS) was in 35 hedge funds’ portfolios at the end of March. The all time high for this statistic is 42. KSS investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. There were 40 hedge funds in our database with KSS positions at the end of the fourth quarter. Our calculations also showed that KSS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Today there are numerous formulas stock market investors can use to analyze stocks. Two of the most underrated formulas are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top investment managers can outperform their index-focused peers by a significant margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Fred DiSanto of Ancora Advisors
At Insider Monkey, we scour multiple sources to uncover 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 battery 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. Keeping this in mind let’s check out the fresh hedge fund action regarding Kohl’s Corporation (NYSE:KSS).
Do Hedge Funds Think KSS Is A Good Stock To Buy Now?
At Q1’s end, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in KSS over the last 23 quarters. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in Kohl’s Corporation (NYSE:KSS). Arrowstreet Capital has a $218.4 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Frederick DiSanto of Ancora Advisors, with a $197.7 million position; 5.5% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that are bullish consist of Phill Gross and Robert Atchinson’s Adage Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Legion Partners Asset Management allocated the biggest weight to Kohl’s Corporation (NYSE:KSS), around 17.62% of its 13F portfolio. Legion Partners Asset Management is also relatively very bullish on the stock, setting aside 7.61 percent of its 13F equity portfolio to KSS.
Seeing as Kohl’s Corporation (NYSE:KSS) has faced a decline in interest from the entirety of the hedge funds we track, logic holds that there is a sect of hedgies that decided to sell off their positions entirely by the end of the first quarter. Interestingly, Frank Fu’s CaaS Capital sold off the biggest stake of the 750 funds watched by Insider Monkey, comprising close to $5.8 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund sold off about $4.9 million worth. These moves are important to note, as aggregate hedge fund interest fell by 5 funds by the end of the first quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Kohl’s Corporation (NYSE:KSS) but similarly valued. We will take a look at Appian Corporation (NASDAQ:APPN), First Horizon Corporation (NYSE:FHN), AptarGroup, Inc. (NYSE:ATR), Deckers Outdoor Corp (NYSE:DECK), Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), First Solar, Inc. (NASDAQ:FSLR), and Pegasystems Inc. (NASDAQ:PEGA). This group of stocks’ market valuations resemble KSS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| APPN | 24 | 914428 | 0 |
| FHN | 27 | 312101 | -3 |
| ATR | 20 | 259991 | 0 |
| DECK | 40 | 922422 | -5 |
| JAZZ | 37 | 1260492 | 8 |
| FSLR | 24 | 304351 | -10 |
| PEGA | 35 | 1728264 | 3 |
| Average | 29.6 | 814578 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.6 hedge funds with bullish positions and the average amount invested in these stocks was $815 million. That figure was $1418 million in KSS’s case. Deckers Outdoor Corp (NYSE:DECK) is the most popular stock in this table. On the other hand AptarGroup, Inc. (NYSE:ATR) is the least popular one with only 20 bullish hedge fund positions. Kohl’s Corporation (NYSE:KSS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KSS is 62.5. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately KSS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on KSS were disappointed as the stock returned -3.6% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Kohls Corp (NYSE:KSS)
Follow Kohls Corp (NYSE:KSS)
Suggested Articles:
- How to Best Use Insider Monkey To Increase Your Returns
- 10 Best Climate Change Stocks to Buy Now
- 15 Biggest oil companies in usa
Disclosure: None. This article was originally published at Insider Monkey.
