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Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Louisiana-Pacific Corporation (NYSE:LPX) changed recently.
Louisiana-Pacific Corporation (NYSE:LPX) has experienced an increase in support from the world's most elite money managers of late. Louisiana-Pacific Corporation (NYSE:LPX) was in 39 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 41. Our calculations also showed that LPX isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Blair Levinsky of Waratah Capital Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV 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. Keeping this in mind let's analyze the latest hedge fund action surrounding Louisiana-Pacific Corporation (NYSE:LPX).
Do Hedge Funds Think LPX Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from the first quarter of 2020. On the other hand, there were a total of 38 hedge funds with a bullish position in LPX a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Platinum Asset Management was the largest shareholder of Louisiana-Pacific Corporation (NYSE:LPX), with a stake worth $202.3 million reported as of the end of June. Trailing Platinum Asset Management was Arrowstreet Capital, which amassed a stake valued at $106.8 million. Scopus Asset Management, Millennium Management, and D E Shaw 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 Sandbar Asset Management allocated the biggest weight to Louisiana-Pacific Corporation (NYSE:LPX), around 5.12% of its 13F portfolio. Platinum Asset Management is also relatively very bullish on the stock, earmarking 4.68 percent of its 13F equity portfolio to LPX.
As industrywide interest jumped, key hedge funds were leading the bulls' herd. Millennium Management, managed by Israel Englander, initiated the most outsized position in Louisiana-Pacific Corporation (NYSE:LPX). Millennium Management had $67.5 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $22.2 million position during the quarter. The other funds with new positions in the stock are Brad Dunkley and Blair Levinsky's Waratah Capital Advisors, Brad Dunkley and Blair Levinsky's Waratah Capital Advisors, and Michael Gelband's ExodusPoint Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Louisiana-Pacific Corporation (NYSE:LPX) but similarly valued. We will take a look at Vir Biotechnology, Inc. (NASDAQ:VIR), Terminix Global Holdings, Inc. (NYSE:TMX), The Timken Company (NYSE:TKR), Perrigo Co Plc (NYSE:PRGO), Varonis Systems Inc (NASDAQ:VRNS), Penske Automotive Group, Inc. (NYSE:PAG), and Tandem Diabetes Care Inc (NASDAQ:TNDM). This group of stocks' market caps match LPX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VIR,11,34719,2 TMX,22,417570,-5 TKR,22,155285,-1 PRGO,28,457403,-5 VRNS,24,336746,-8 PAG,19,188147,7 TNDM,32,352984,7 Average,22.6,277551,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.6 hedge funds with bullish positions and the average amount invested in these stocks was $278 million. That figure was $852 million in LPX's case. Tandem Diabetes Care Inc (NASDAQ:TNDM) is the most popular stock in this table. On the other hand Vir Biotechnology, Inc. (NASDAQ:VIR) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Louisiana-Pacific Corporation (NYSE:LPX) is more popular among hedge funds. Our overall hedge fund sentiment score for LPX is 88.5. 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. 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 returned 21.8% in 2021 through October 11th but still managed to beat the market by 4.4 percentage points. Hedge funds were also right about betting on LPX as the stock returned 6.3% since the end of June (through 10/11) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.