Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze KBR, Inc. (NYSE:KBR) from the perspective of those elite funds.
KBR, Inc. (NYSE:KBR) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 28 hedge funds’ portfolios at the end of the third quarter of 2015. 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 Dycom Industries, Inc. (NYSE:DY), Texas Capital Bancshares Inc (NASDAQ:TCBI), and IBERIABANK Corporation (NASDAQ:IBKC) to gather more data points.
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With all of this in mind, we’re going to go over the key action surrounding KBR, Inc. (NYSE:KBR).
Hedge fund activity in KBR, Inc. (NYSE:KBR)
When looking at the institutional investors followed by Insider Monkey, Huber Capital Management, managed by Joe Huber, holds the biggest position in KBR, Inc. (NYSE:KBR). Huber Capital Management has a $177.2 million position in the stock, comprising 6.2% of its 13F portfolio. Coming in second is Platinum Asset Management, led by Kerr Neilson, holding a $153.1 million position; 4.1% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism comprise Dmitry Balyasny’s Balyasny Asset Management, Chuck Royce’s Royce & Associates and Joel Greenblatt’s Gotham Asset Management.
At the top of the heap, Matthew Knauer and Mina Faltas’s Nokota Management dumped the biggest position of all the hedgies followed by Insider Monkey, worth close to $20 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund cut about $12.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to KBR, Inc. (NYSE:KBR) on the next page.
These stocks are Dycom Industries, Inc. (NYSE:DY), Texas Capital Bancshares Inc (NASDAQ:TCBI), IBERIABANK Corporation (NASDAQ:IBKC), and Huntsman Corporation (NYSE:HUN). This group of stocks’ market valuations match KBR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DY | 25 | 579172 | 2 |
| TCBI | 15 | 219834 | -1 |
| IBKC | 8 | 188712 | -2 |
| HUN | 45 | 465214 | 7 |
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $363 million. That figure was $709 million in KBR’s case. Huntsman Corporation (NYSE:HUN) is the most popular stock in this table. On the other hand IBERIABANK Corporation (NASDAQ:IBKC) is the least popular one with only 8 bullish hedge fund positions. KBR, Inc. (NYSE:KBR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard HUN might be a better candidate to consider a long position.
