Should You Avoid Kingstone Companies Inc (KINS)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Kingstone Companies Inc (NASDAQ:KINS)?

Kingstone Companies Inc (NASDAQ:KINS) has seen a decrease in hedge fund sentiment lately. KINS was in 4 hedge funds’ portfolios at the end of the first quarter of 2020. There were 5 hedge funds in our database with KINS holdings at the end of the previous quarter. Our calculations also showed that KINS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are a large number of indicators market participants put to use to size up their stock investments. A pair of the most underrated indicators are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the top hedge fund managers can outperform the market by a very impressive amount (see the details here).

Chuck Royce of Royce & Associates

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to analyze the latest hedge fund action encompassing Kingstone Companies Inc (NASDAQ:KINS).

What have hedge funds been doing with Kingstone Companies Inc (NASDAQ:KINS)?

Heading into the second quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in KINS over the last 18 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the number one position in Kingstone Companies Inc (NASDAQ:KINS). Royce & Associates has a $2.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, holding a $2.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers that are bullish encompass John Overdeck and David Siegel’s Two Sigma Advisors, David Harding’s Winton Capital Management and . In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Kingstone Companies Inc (NASDAQ:KINS), around 0.03% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.0043 percent of its 13F equity portfolio to KINS.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified KINS as a viable investment and initiated a position in the stock.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Kingstone Companies Inc (NASDAQ:KINS) but similarly valued. These stocks are Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX), Trevena Inc (NASDAQ:TRVN), Strattec Security Corp. (NASDAQ:STRT), and LMP Automotive Holdings, Inc. (NASDAQ:LMPX). This group of stocks’ market valuations resemble KINS’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $5 million in KINS’s case. Trevena Inc (NASDAQ:TRVN) is the most popular stock in this table. On the other hand LMP Automotive Holdings, Inc. (NASDAQ:LMPX) is the least popular one with only 1 bullish hedge fund positions. Kingstone Companies Inc (NASDAQ:KINS) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately KINS wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on KINS were disappointed as the stock returned -13.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

Disclosure: None. This article was originally published at Insider Monkey.