Smart Money Remains Confident in Koppers Holdings Inc. (KOP)

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data shows that elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the  four quarters ending October 31 and 63% of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Koppers Holdings Inc. (NYSE:KOP) from the perspective of those elite funds.

Koppers Holdings Inc. (NYSE:KOP) shareholders have witnessed an increase in enthusiasm from smart money in recent months, rising by 3. 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 El Pollo LoCo Holdings Inc (NASDAQ:LOCO), Metro Bancorp Inc (NASDAQ:METR), and Concert Pharmaceuticals Inc (NASDAQ:CNCE) to gather more data points.

In the financial world there are a multitude of tools market participants put to use to grade stocks. A couple of the most innovative tools are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the best investment managers can outpace the S&P 500 by a superb margin (see the details here).

With all of this in mind, we’re going to view the fresh action surrounding Koppers Holdings Inc. (NYSE:KOP).

How are hedge funds trading Koppers Holdings Inc. (NYSE:KOP)?

Heading into Q4, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a 19% rise from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or had already accumulated large positions).

Of the funds tracked by Insider Monkey, Mountain Lake Investment Management, managed by Mitch Cantor, holds the largest position in Koppers Holdings Inc. (NYSE:KOP). Mountain Lake Investment Management has a $9.7 million position in the stock, comprising 7.8% of its 13F portfolio. The second-largest stake is held by Andalusian Capital Partners, managed by Michael Reeber, which holds a $9.5 million position; 3.6% of its 13F portfolio is allocated to the company. Other peers that are bullish comprise Dov Gertzulin’s DG Capital Management, Nelson Obus’ Wynnefield Capital, and Israel Englander’s Millennium Management.

As aggregate interest increased, some big names were leading the bulls’ herd. Renaissance Technologies created the biggest position in Koppers Holdings Inc. (NYSE:KOP). Renaissance Technologies had $1 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated a $0.8 million position during the quarter. The other funds with brand new KOP positions are Mike Vranos’ Ellington, Neil Chriss’ Hutchin Hill Capital, and Ken Gray and Steve Walsh’s Bryn Mawr Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Koppers Holdings Inc. (NYSE:KOP) but similarly valued. These stocks are El Pollo LoCo Holdings Inc (NASDAQ:LOCO), Metro Bancorp Inc (NASDAQ:METR), Concert Pharmaceuticals Inc (NASDAQ:CNCE), and Hawkins, Inc. (NASDAQ:HWKN). This group of stocks’ market caps are similar to KOP’s market cap.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $60 million in KOP’s case. Concert Pharmaceuticals Inc (NASDAQ:CNCE) is the most popular stock in this table. On the other hand Hawkins, Inc. (NASDAQ:HWKN) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Koppers Holdings Inc. (NYSE:KOP) 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.