The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Akerna Corp. (NASDAQ:KERN).
Akerna Corp. (NASDAQ:KERN) investors should pay attention to a decrease in enthusiasm from smart money of late. Akerna Corp. (NASDAQ:KERN) was in 3 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 8. Our calculations also showed that KERN isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
In the eyes of most stock holders, hedge funds are assumed to be unimportant, old investment vehicles of the past. While there are over 8000 funds with their doors open at present, Our experts hone in on the masters of this group, around 850 funds. These money managers direct bulk of the hedge fund industry’s total asset base, and by keeping track of their inimitable equity investments, Insider Monkey has unsheathed several investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Jack Ripsteen of Potrero Capital Research
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to take a glance at the latest hedge fund action surrounding Akerna Corp. (NASDAQ:KERN).
How are hedge funds trading Akerna Corp. (NASDAQ:KERN)?
At Q3’s end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the second quarter of 2020. On the other hand, there were a total of 4 hedge funds with a bullish position in KERN a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, Fairpointe Capital was the largest shareholder of Akerna Corp. (NASDAQ:KERN), with a stake worth $0.3 million reported as of the end of September. Trailing Fairpointe Capital was Levin Capital Strategies, which amassed a stake valued at $0.1 million. Potrero Capital Research was 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 Fairpointe Capital allocated the biggest weight to Akerna Corp. (NASDAQ:KERN), around 0.05% of its 13F portfolio. Levin Capital Strategies is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to KERN.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: G2 Investment Partners 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 KERN as a viable investment and initiated a position in the stock.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Akerna Corp. (NASDAQ:KERN) but similarly valued. These stocks are Merrimack Pharmaceuticals Inc (NASDAQ:MACK), Soligenix, Inc. (NASDAQ:SNGX), Verb Technology Company, Inc. (NASDAQ:VERB), Full House Resorts, Inc. (NASDAQ:FLL), Bioanalytical Systems, Inc. (NASDAQ:BASI), Capstone Turbine Corporation (NASDAQ:CPST), and Gulf Resources, Inc. (NASDAQ:GURE). This group of stocks’ market valuations match KERN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MACK | 4 | 10257 | 1 |
| SNGX | 2 | 1448 | -1 |
| VERB | 5 | 359 | 1 |
| FLL | 8 | 4441 | 1 |
| BASI | 1 | 2390 | 0 |
| CPST | 4 | 1545 | 1 |
| GURE | 1 | 2008 | 0 |
| Average | 3.6 | 3207 | 0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.6 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $0 million in KERN’s case. Full House Resorts, Inc. (NASDAQ:FLL) is the most popular stock in this table. On the other hand Bioanalytical Systems, Inc. (NASDAQ:BASI) is the least popular one with only 1 bullish hedge fund positions. Akerna Corp. (NASDAQ:KERN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KERN is 29.5. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and surpassed the market again by 15.4 percentage points. Unfortunately KERN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); KERN investors were disappointed as the stock returned -1.6% since the end of September (through 11/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
