The financial regulations require hedge funds and wealthy investors that crossed the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on June 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Ladder Capital Corp (NYSE:LADR) based on those filings.
Ladder Capital Corp (NYSE:LADR) was in 13 hedge funds' portfolios at the end of the second quarter of 2019. LADR has seen a decrease in enthusiasm from smart money lately. There were 15 hedge funds in our database with LADR holdings at the end of the previous quarter. Our calculations also showed that LADR isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to check out the latest hedge fund action encompassing Ladder Capital Corp (NYSE:LADR).
How are hedge funds trading Ladder Capital Corp (NYSE:LADR)?
Heading into the third quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards LADR over the last 16 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Among these funds, Millennium Management held the most valuable stake in Ladder Capital Corp (NYSE:LADR), which was worth $20.6 million at the end of the second quarter. On the second spot was Marathon Asset Management which amassed $4.9 million worth of shares. Moreover, Renaissance Technologies, Winton Capital Management, and D E Shaw were also bullish on Ladder Capital Corp (NYSE:LADR), allocating a large percentage of their portfolios to this stock.
Since Ladder Capital Corp (NYSE:LADR) has experienced bearish sentiment from hedge fund managers, logic holds that there is a sect of hedge funds that decided to sell off their full holdings by the end of the second quarter. At the top of the heap, Paul Marshall and Ian Wace's Marshall Wace LLP dumped the largest stake of all the hedgies followed by Insider Monkey, worth close to $4.5 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also dropped its stock, about $0.5 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 2 funds by the end of the second quarter.
Let's now review hedge fund activity in other stocks similar to Ladder Capital Corp (NYSE:LADR). These stocks are Hilltop Holdings Inc. (NYSE:HTH), Retail Opportunity Investments Corp (NASDAQ:ROIC), Anixter International Inc. (NYSE:AXE), and TowneBank (NASDAQ:TOWN). 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 HTH,18,107708,-1 ROIC,13,109601,5 AXE,20,258192,-3 TOWN,7,36621,0 Average,14.5,128031,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $128 million. That figure was $33 million in LADR's case. Anixter International Inc. (NYSE:AXE) is the most popular stock in this table. On the other hand TowneBank (NASDAQ:TOWN) is the least popular one with only 7 bullish hedge fund positions. Ladder Capital Corp (NYSE:LADR) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on LADR as the stock returned 6.1% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.