The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought KLA Corporation (NASDAQ:KLAC) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.
KLA Corporation (NASDAQ:KLAC) investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. KLA Corporation (NASDAQ:KLAC) was in 44 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 46. There were 45 hedge funds in our database with KLAC holdings at the end of June. Our calculations also showed that KLAC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to go over the latest hedge fund action surrounding KLA Corporation (NASDAQ:KLAC).
Do Hedge Funds Think KLAC Is A Good Stock To Buy Now?
At Q3’s end, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from the previous quarter. On the other hand, there were a total of 33 hedge funds with a bullish position in KLAC a year ago. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, Alkeon Capital Management was the largest shareholder of KLA Corporation (NASDAQ:KLAC), with a stake worth $551.6 million reported as of the end of September. Trailing Alkeon Capital Management was Arrowstreet Capital, which amassed a stake valued at $274.3 million. Holocene Advisors, Citadel Investment Group, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Force Hill Capital Management allocated the biggest weight to KLA Corporation (NASDAQ:KLAC), around 4.75% of its 13F portfolio. Breakline Capital is also relatively very bullish on the stock, dishing out 3.58 percent of its 13F equity portfolio to KLAC.
Since KLA Corporation (NASDAQ:KLAC) has witnessed declining sentiment from hedge fund managers, logic holds that there is a sect of hedgies that decided to sell off their positions entirely in the third quarter. It’s worth mentioning that Ray Dalio’s Bridgewater Associates said goodbye to the biggest position of the “upper crust” of funds monitored by Insider Monkey, totaling close to $13 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund sold off about $2.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as KLA Corporation (NASDAQ:KLAC) but similarly valued. We will take a look at DocuSign, Inc. (NASDAQ:DOCU), MSCI Inc (NYSE:MSCI), Canadian Imperial Bank of Commerce (NYSE:CM), Humana Inc (NYSE:HUM), Marvell Technology Group Ltd. (NASDAQ:MRVL), Dollar General Corp. (NYSE:DG), and Banco Santander (Brasil) SA (NYSE:BSBR). This group of stocks’ market valuations are similar to KLAC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DOCU | 51 | 4238147 | -7 |
| MSCI | 43 | 997992 | 6 |
| CM | 13 | 289714 | -2 |
| HUM | 60 | 2900740 | 1 |
| MRVL | 45 | 1152936 | -6 |
| DG | 46 | 1905639 | 1 |
| BSBR | 8 | 10442 | 1 |
| Average | 38 | 1642230 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $1642 million. That figure was $1844 million in KLAC’s case. Humana Inc (NYSE:HUM) is the most popular stock in this table. On the other hand Banco Santander (Brasil) SA (NYSE:BSBR) is the least popular one with only 8 bullish hedge fund positions. KLA Corporation (NASDAQ:KLAC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KLAC is 67.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on KLAC as the stock returned 16.7% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
