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In this article we are going to use hedge fund sentiment as a tool and determine whether Lamar Advertising Company (REIT) (NASDAQ:LAMR) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Lamar Advertising Company (REIT) (NASDAQ:LAMR) a worthy investment right now? Hedge funds were taking a bearish view. The number of long hedge fund bets retreated by 3 recently. Lamar Advertising Company (REIT) (NASDAQ:LAMR) was in 32 hedge funds' portfolios at the end of June. The all time high for this statistic is 44. Our calculations also showed that LAMR isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 35 hedge funds in our database with LAMR positions at the end of the first quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Richard Gerson of Falcon Edge Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium 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 we're going to review the recent hedge fund action surrounding Lamar Advertising Company (REIT) (NASDAQ:LAMR).
Do Hedge Funds Think LAMR Is A Good Stock To Buy Now?
At Q2's end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from one quarter earlier. On the other hand, there were a total of 44 hedge funds with a bullish position in LAMR a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Jericho Capital Asset Management, managed by Josh Resnick, holds the number one position in Lamar Advertising Company (REIT) (NASDAQ:LAMR). Jericho Capital Asset Management has a $85.4 million position in the stock, comprising 2% of its 13F portfolio. On Jericho Capital Asset Management's heels is Robert Joseph Caruso of Select Equity Group, with a $61.9 million position; 0.2% of its 13F portfolio is allocated to the stock. Other peers that are bullish comprise Brad Dunkley and Blair Levinsky's Waratah Capital Advisors, Richard Gerson and Navroz D. Udwadia's Falcon Edge Capital and Peter Lewis's LFL Advisers. In terms of the portfolio weights assigned to each position LFL Advisers allocated the biggest weight to Lamar Advertising Company (REIT) (NASDAQ:LAMR), around 12.93% of its 13F portfolio. Falcon Edge Capital is also relatively very bullish on the stock, setting aside 2.66 percent of its 13F equity portfolio to LAMR.
Seeing as Lamar Advertising Company (REIT) (NASDAQ:LAMR) has witnessed falling interest from the entirety of the hedge funds we track, it's safe to say that there were a few money managers that elected to cut their entire stakes by the end of the second quarter. At the top of the heap, Jeffrey Tannenbaum's Fir Tree dropped the largest investment of all the hedgies followed by Insider Monkey, worth about $36.7 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund dumped about $22 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 3 funds by the end of the second quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Lamar Advertising Company (REIT) (NASDAQ:LAMR) but similarly valued. These stocks are Lear Corporation (NYSE:LEA), China Southern Airlines Co Ltd (NYSE:ZNH), Vereit Inc (NYSE:VER), Bausch Health Companies Inc. (NYSE:BHC), Universal Display Corporation (NASDAQ:OLED), Lithia Motors Inc (NYSE:LAD), and Henry Schein, Inc. (NASDAQ:HSIC). This group of stocks' market values match LAMR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LEA,34,1244893,11 ZNH,2,11192,-1 VER,22,797543,-5 BHC,45,3996536,3 OLED,23,105427,6 LAD,63,2924134,23 HSIC,39,1387222,7 Average,32.6,1495278,6.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.6 hedge funds with bullish positions and the average amount invested in these stocks was $1495 million. That figure was $388 million in LAMR's case. Lithia Motors Inc (NYSE:LAD) is the most popular stock in this table. On the other hand China Southern Airlines Co Ltd (NYSE:ZNH) is the least popular one with only 2 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 overall hedge fund sentiment score for LAMR is 48.4. 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 gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on LAMR as the stock returned 15.1% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.