We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article, we look at what those funds think of KVH Industries, Inc. (NASDAQ:KVHI) based on that data.
KVH Industries, Inc. (NASDAQ:KVHI) has seen an increase in hedge fund interest in recent months. KVH Industries, Inc. (NASDAQ:KVHI) was in 5 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 9. There were 4 hedge funds in our database with KVHI holdings at the end of December. Our calculations also showed that KVHI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Eric Singer VIEX Capital
Eric Singer of VIEX Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. 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 homepage. With all of this in mind let's take a peek at the key hedge fund action encompassing KVH Industries, Inc. (NASDAQ:KVHI).
Do Hedge Funds Think KVHI Is A Good Stock To Buy Now?
At first quarter's end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in KVHI over the last 23 quarters. With the smart money's capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, VIEX Capital Advisors was the largest shareholder of KVH Industries, Inc. (NASDAQ:KVHI), with a stake worth $11 million reported as of the end of March. Trailing VIEX Capital Advisors was Renaissance Technologies, which amassed a stake valued at $3.6 million. Arrowstreet Capital, Citadel Investment Group, and Citadel Investment Group 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 VIEX Capital Advisors allocated the biggest weight to KVH Industries, Inc. (NASDAQ:KVHI), around 8.19% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to KVHI.
As aggregate interest increased, key hedge funds have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, initiated the biggest call position in KVH Industries, Inc. (NASDAQ:KVHI). Citadel Investment Group had $0.2 million invested in the company at the end of the quarter. Peter Muller's PDT Partners also made a $0.2 million investment in the stock during the quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as KVH Industries, Inc. (NASDAQ:KVHI) but similarly valued. These stocks are Ames National Corporation (NASDAQ:ATLO), LogicBio Therapeutics, Inc. (NASDAQ:LOGC), PCB Bancorp (NASDAQ:PCB), Hurco Companies, Inc. (NASDAQ:HURC), Bluerock Residential Growth REIT Inc (NYSE:BRG), Alpha Metallurgical Resources, Inc. (NYSE:AMR), and Leaf Group Ltd (NYSE:LEAF). This group of stocks' market values resemble KVHI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATLO,3,11589,0 LOGC,6,85612,-2 PCB,4,29911,-1 HURC,7,41714,4 BRG,7,7011,4 AMR,19,65061,0 LEAF,15,66994,-5 Average,8.7,43985,0 [/table]
As you can see these stocks had an average of 8.7 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $16 million in KVHI's case. Alpha Metallurgical Resources, Inc. (NYSE:AMR) is the most popular stock in this table. On the other hand Ames National Corporation (NASDAQ:ATLO) is the least popular one with only 3 bullish hedge fund positions. KVH Industries, Inc. (NASDAQ:KVHI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KVHI is 28.9. 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 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 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately KVHI wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); KVHI investors were disappointed as the stock returned -3.9% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
