U.S. Markets closed

Hedge Funds Are Betting On Liberty Broadband Corp (LBRDA)

Abigail Fisher

Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That's why we weren't surprised when hedge funds’ top 20 large-cap stock picks generated a return of 37.6% in 2019 (through the end of November) and outperformed the broader market benchmark by 9.9 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Liberty Broadband Corp (NASDAQ:LBRDA) has experienced an increase in support from the world's most elite money managers lately. LBRDA was in 21 hedge funds' portfolios at the end of the third quarter of 2019. There were 20 hedge funds in our database with LBRDA holdings at the end of the previous quarter. Our calculations also showed that LBRDA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds
5 Most Popular Stocks Among Hedge Funds

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

[caption id="attachment_30647" align="aligncenter" width="478"] Boykin Curry of Eagle Capital[/caption]

Boykin Curry EAGLE CAPITAL MANAGEMENT
Boykin Curry EAGLE CAPITAL MANAGEMENT

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to check out the new hedge fund action encompassing Liberty Broadband Corp (NASDAQ:LBRDA).

What have hedge funds been doing with Liberty Broadband Corp (NASDAQ:LBRDA)?

Heading into the fourth quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the second quarter of 2019. On the other hand, there were a total of 22 hedge funds with a bullish position in LBRDA a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

The largest stake in Liberty Broadband Corp (NASDAQ:LBRDA) was held by FPR Partners, which reported holding $154.4 million worth of stock at the end of September. It was followed by Eagle Capital Management with a $118.7 million position. Other investors bullish on the company included Ashe Capital, D E Shaw, and Hudson Bay Capital Management. In terms of the portfolio weights assigned to each position Ashe Capital allocated the biggest weight to Liberty Broadband Corp (NASDAQ:LBRDA), around 8.21% of its 13F portfolio. Act II Capital is also relatively very bullish on the stock, setting aside 8.05 percent of its 13F equity portfolio to LBRDA.

With a general bullishness amongst the heavyweights, some big names have jumped into Liberty Broadband Corp (NASDAQ:LBRDA) headfirst. Perella Weinberg Partners, initiated the largest position in Liberty Broadband Corp (NASDAQ:LBRDA). Perella Weinberg Partners had $5.1 million invested in the company at the end of the quarter. Michael Hintze's CQS Cayman LP also initiated a $4.6 million position during the quarter. The only other fund with a new position in the stock is Michael Gelband's ExodusPoint Capital.

Let's also examine hedge fund activity in other stocks similar to Liberty Broadband Corp (NASDAQ:LBRDA). We will take a look at Pembina Pipeline Corp (NYSE:PBA), Fastenal Company (NASDAQ:FAST), ANSYS, Inc. (NASDAQ:ANSS), and Church & Dwight Co., Inc. (NYSE:CHD). All of these stocks' market caps are closest to LBRDA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PBA,10,101496,-2 FAST,28,1046417,-1 ANSS,28,882714,3 CHD,34,543789,4 Average,25,643604,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $644 million. That figure was $694 million in LBRDA's case. Church & Dwight Co., Inc. (NYSE:CHD) is the most popular stock in this table. On the other hand Pembina Pipeline Corp (NYSE:PBA) is the least popular one with only 10 bullish hedge fund positions. Liberty Broadband Corp (NASDAQ:LBRDA) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on LBRDA as the stock returned 13.2% during the first two months of Q4 and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.

Related Content