Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before last year's Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first half of 2019, most investors recovered all of their Q4 losses as sentiment shifted and optimism dominated the US China trade negotiations. Nevertheless, many of the stocks that delivered strong returns in the first half still sport strong fundamentals and their gains were more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Lamar Advertising Company (REIT) (NASDAQ:LAMR) changed recently.
Lamar Advertising Company (REIT) (NASDAQ:LAMR) was in 28 hedge funds' portfolios at the end of the third quarter of 2019. LAMR has seen an increase in hedge fund interest recently. There were 24 hedge funds in our database with LAMR holdings at the end of the previous quarter. Our calculations also showed that LAMR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
To the average investor there are tons of gauges investors can use to appraise publicly traded companies. A duo of the less known gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outperform the market by a healthy margin (see the details here).
[caption id="attachment_673876" align="aligncenter" width="473"] John Overdeck of Two Sigma Advisors[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind let's take a look at the fresh hedge fund action regarding Lamar Advertising Company (REIT) (NASDAQ:LAMR).
What does smart money think about Lamar Advertising Company (REIT) (NASDAQ:LAMR)?
Heading into the fourth quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards LAMR over the last 17 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Lamar Advertising Company (REIT) (NASDAQ:LAMR) was held by Renaissance Technologies, which reported holding $160.7 million worth of stock at the end of September. It was followed by Water Street Capital with a $13.2 million position. Other investors bullish on the company included Echo Street Capital Management, Grisanti Brown & Partners, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Grisanti Brown & Partners allocated the biggest weight to Lamar Advertising Company (REIT) (NASDAQ:LAMR), around 4.34% of its 13F portfolio. Water Street Capital is also relatively very bullish on the stock, designating 1.03 percent of its 13F equity portfolio to LAMR.
Consequently, some big names were breaking ground themselves. Echo Street Capital Management, managed by Greg Poole, created the most outsized position in Lamar Advertising Company (REIT) (NASDAQ:LAMR). Echo Street Capital Management had $11.5 million invested in the company at the end of the quarter. Ken Heebner's Capital Growth Management also made a $4.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Tudor Jones's Tudor Investment Corp, David E. Shaw's D E Shaw, and Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Lamar Advertising Company (REIT) (NASDAQ:LAMR) but similarly valued. We will take a look at Tradeweb Markets Inc. (NASDAQ:TW), Gaming and Leisure Properties Inc (NASDAQ:GLPI), National Oilwell Varco, Inc. (NYSE:NOV), and Under Armour Inc (NYSE:UA). All of these stocks' market caps resemble LAMR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TW,37,400592,0 GLPI,31,773259,4 NOV,23,894471,1 UA,32,921157,-6 Average,30.75,747370,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.75 hedge funds with bullish positions and the average amount invested in these stocks was $747 million. That figure was $238 million in LAMR's case. Tradeweb Markets Inc. (NASDAQ:TW) is the most popular stock in this table. On the other hand National Oilwell Varco, Inc. (NYSE:NOV) is the least popular one with only 23 bullish hedge fund positions. Lamar Advertising Company (REIT) (NASDAQ:LAMR) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. A small number of hedge funds were also right about betting on LAMR, though not to the same extent, as the stock returned 34.1% in 2019 (as of 12/23) and outperformed the market. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.