Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. This year hedge funds’ top 30 stock picks easily bested the broader market, at 6.7% compared to 2.6%, despite there being a few duds in there like Facebook (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Is KEMET Corporation (NYSE:KEM) a buy, sell, or hold? Investors who are in the know are in a bullish mood. The number of long hedge fund bets improved by 1 lately. Our calculations also showed that kem isn’t among the 30 most popular stocks among hedge funds.
In the eyes of most investors, hedge funds are perceived as slow, outdated financial tools of yesteryear. While there are more than 8,000 funds in operation today, We hone in on the masters of this group, around 700 funds. These hedge fund managers preside over the majority of all hedge funds’ total capital, and by shadowing their first-class equity investments, Insider Monkey has unearthed a few investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
We’re going to analyze the latest hedge fund action surrounding KEMET Corporation (NYSE:KEM).
Hedge fund activity in KEMET Corporation (NYSE:KEM)
At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards KEM over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in KEMET Corporation (NYSE:KEM), which was worth $50.9 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $23.9 million worth of shares. Moreover, AQR Capital Management, Marshall Wace LLP, and Millennium Management were also bullish on KEMET Corporation (NYSE:KEM), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, key money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the most outsized position in KEMET Corporation (NYSE:KEM). Marshall Wace LLP had $9.2 million invested in the company at the end of the quarter. Eric Singer’s VIEX Capital Advisors also made a $2.5 million investment in the stock during the quarter. The other funds with new positions in the stock are David Costen Haley’s HBK Investments, Ira Unschuld’s Brant Point Investment Management, and David Andre and Astro Teller’s Cerebellum Capital.
Let’s now take a look at hedge fund activity in other stocks similar to KEMET Corporation (NYSE:KEM). We will take a look at Trueblue Inc (NYSE:TBI), Viking Therapeutics, Inc. (NASDAQ:VKTX), CareDx, Inc. (NASDAQ:CDNA), and Century Aluminum Co (NASDAQ:CENX). This group of stocks’ market valuations resemble KEM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TBI | 14 | 67922 | -2 |
| VKTX | 27 | 133239 | 9 |
| CDNA | 19 | 118417 | 4 |
| CENX | 11 | 71005 | -5 |
| Average | 17.75 | 97646 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $98 million. That figure was $130 million in KEM’s case. Viking Therapeutics, Inc. (NASDAQ:VKTX) is the most popular stock in this table. On the other hand Century Aluminum Co (NASDAQ:CENX) is the least popular one with only 11 bullish hedge fund positions. KEMET Corporation (NYSE:KEM) 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 VKTX might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
