Hedge Funds Are Selling Eastman Kodak Co. (KODK) | Fintech Zoom
Hedge Funds Are Selling Eastman Kodak Co. (KODK)
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Eastman Kodak Co. (NYSE:KODK).
Is Eastman Kodak Co. (NYSE:KODK) undervalued? Prominent investors are in a pessimistic mood. The number of long hedge fund bets were cut by 1 in recent months. Our calculations also showed that KODK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). KODK was in 6 hedge funds’ portfolios at the end of the first quarter of 2020. There were 7 hedge funds in our database with KODK positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Overdeck of Two Sigma Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to analyze the latest hedge fund action regarding Eastman Kodak Co. (NYSE:KODK).
Heading into the second quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the fourth quarter of 2019. By comparison, 4 hedge funds held shares or bullish call options in KODK a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Mason Hawkins’s Southeastern Asset Management has the number one position in Eastman Kodak Co. (NYSE:KODK), worth close to $8.6 million, corresponding to 0.2% of its total 13F portfolio. Coming in second is Paradice Investment Management, led by David Paradice, holding a $0.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism contain Renaissance Technologies, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Southeastern Asset Management allocated the biggest weight to Eastman Kodak Co. (NYSE:KODK), around 0.2% of its 13F portfolio. Paradice Investment Management is also relatively very bullish on the stock, designating 0.06 percent of its 13F equity portfolio to KODK.
Seeing as Eastman Kodak Co. (NYSE:KODK) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers who were dropping their positions entirely last quarter. Interestingly, Michael Gelband’s ExodusPoint Capital cut the biggest investment of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $0.3 million in stock, and Ari Zweiman’s 683 Capital Partners was right behind this move, as the fund dumped about $0.1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Eastman Kodak Co. (NYSE:KODK). These stocks are Limestone Bancorp, Inc. (NASDAQ:LMST), BioNTech US Inc. (NASDAQ:NTGN), Maiden Holdings, Ltd. (NASDAQ:MHLD), and Research Frontiers, Inc. (NASDAQ:REFR). All of these stocks’ market caps match KODK’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LMST,3,6198,-1 NTGN,4,5691,1 MHLD,7,8978,0 REFR,2,123,1 Average,4,5248,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $10 million in KODK’s case. Maiden Holdings, Ltd. (NASDAQ:MHLD) is the most popular stock in this table. On the other hand Research Frontiers, Inc. (NASDAQ:REFR) is the least popular one with only 2 bullish hedge fund positions. Eastman Kodak Co. (NYSE:KODK) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on KODK as the stock returned 59% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.