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.
Kindred Biosciences Inc (NASDAQ:KIN) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was flat over the quarter. The stock was in 7 hedge funds’ portfolios at the end of September. At the end of this article we will also compare KIN to other stocks including American Superconductor Corporation (NASDAQ:AMSC), Ballantyne Strong Inc (NYSEAMEX:BTN), and ASB Bancorp Inc (NASDAQ:ASBB) to get a better sense of its popularity.
Follow Kindred Biosciences Inc. (NASDAQ:KIN)
Follow Kindred Biosciences Inc. (NASDAQ:KIN)
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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Keeping this in mind, we’re going to take a peek at the new action surrounding Kindred Biosciences Inc (NASDAQ:KIN).
How have hedgies been trading Kindred Biosciences Inc (NASDAQ:KIN)?
At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards KIN over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ariel Investments, led by John W. Rogers, holds the largest position in Kindred Biosciences Inc (NASDAQ:KIN). According to regulatory filings, the fund has a $19.1 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Baupost Group, led by Seth Klarman, which holds a $15 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that hold long positions include Peter S. Park’s Park West Asset Management, Oleg Nodelman’s EcoR1 Capital and Renaissance Technologies, one of the largest hedge funds in the world. 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-microcap stocks.
Earlier we told you that the aggregate hedge fund interest in Kindred Biosciences Inc (NASDAQ:KIN) was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s also examine hedge fund activity in other stocks similar to Kindred Biosciences Inc (NASDAQ:KIN). These stocks are American Superconductor Corporation (NASDAQ:AMSC), Ballantyne Strong Inc (NYSEAMEX:BTN), ASB Bancorp Inc (NASDAQ:ASBB), and Carolina Bank Holding Inc. (NC) (NASDAQ:CLBH). This group of stocks’ market caps resemble KIN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMSC | 6 | 3865 | -3 |
| BTN | 5 | 23812 | 1 |
| ASBB | 4 | 9022 | -1 |
| CLBH | 6 | 10130 | 1 |
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $54 million in KIN’s case. American Superconductor Corporation (NASDAQ:AMSC) is the most popular stock in this table. On the other hand ASB Bancorp Inc (NASDAQ:ASBB) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Kindred Biosciences Inc (NASDAQ:KIN) 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.
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