Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Ladder Capital Corp (NYSE:LADR) based on that data.
Ladder Capital Corp (NYSE:LADR) investors should pay attention to an increase in hedge fund sentiment recently. Our calculations also showed that LADR 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). Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 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 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_844243" align="aligncenter" width="397"] Donald Sussman of Paloma Partners[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 let's take a look at the new hedge fund action regarding Ladder Capital Corp (NYSE:LADR).
What does smart money think about Ladder Capital Corp (NYSE:LADR)?
At Q1's end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 55% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in LADR 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.
Among these funds, Millennium Management held the most valuable stake in Ladder Capital Corp (NYSE:LADR), which was worth $8.6 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $5.1 million worth of shares. Balyasny Asset Management, Winton Capital Management, 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 Indaba Capital Management allocated the biggest weight to Ladder Capital Corp (NYSE:LADR), around 0.84% of its 13F portfolio. Marathon Asset Management is also relatively very bullish on the stock, setting aside 0.2 percent of its 13F equity portfolio to LADR.
As aggregate interest increased, some big names were breaking ground themselves. Indaba Capital Management, managed by Derek C. Schrier, assembled the most valuable position in Ladder Capital Corp (NYSE:LADR). Indaba Capital Management had $1.6 million invested in the company at the end of the quarter. Mike Vranos's Ellington also made a $0.2 million investment in the stock during the quarter. The following funds were also among the new LADR investors: Greg Eisner's Engineers Gate Manager, Donald Sussman's Paloma Partners, and Paul Tudor Jones's Tudor Investment Corp.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Ladder Capital Corp (NYSE:LADR) but similarly valued. We will take a look at Collier Creek Holdings (NYSE:CCH), Nicolet Bankshares Inc. (NASDAQ:NCBS), Abercrombie & Fitch Co. (NYSE:ANF), and SilverCrest Metals Inc. (NYSE:SILV). This group of stocks' market values match LADR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CCH,14,125059,-2 NCBS,5,5413,0 ANF,23,163425,-3 SILV,9,34421,-2 Average,12.75,82080,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $27 million in LADR's case. Abercrombie & Fitch Co. (NYSE:ANF) is the most popular stock in this table. On the other hand Nicolet Bankshares Inc. (NASDAQ:NCBS) is the least popular one with only 5 bullish hedge fund positions. Ladder Capital Corp (NYSE:LADR) 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 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on LADR as the stock returned 68.2% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.