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We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article, we look at what those funds think of LightPath Technologies, Inc. (NASDAQ:LPTH) based on that data.
Is LightPath Technologies, Inc. (NASDAQ:LPTH) a buy, sell, or hold? Investors who are in the know are taking a bullish view. The number of bullish hedge fund bets increased by 1 recently. Our calculations also showed that LPTH isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). LPTH was in 3 hedge funds' portfolios at the end of September. There were 2 hedge funds in our database with LPTH positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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Chuck Royce of Royce & Associates[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind we're going to view the recent hedge fund action encompassing LightPath Technologies, Inc. (NASDAQ:LPTH).
How have hedgies been trading LightPath Technologies, Inc. (NASDAQ:LPTH)?
Heading into the fourth quarter of 2019, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LPTH over the last 17 quarters. With hedge funds' sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Royce & Associates, managed by Chuck Royce, holds the number one position in LightPath Technologies, Inc. (NASDAQ:LPTH). Royce & Associates has a $1.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Royce & Associates's heels is Renaissance Technologies, holding a $0.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to LightPath Technologies, Inc. (NASDAQ:LPTH), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0002 percent of its 13F equity portfolio to LPTH.
Consequently, key money managers have jumped into LightPath Technologies, Inc. (NASDAQ:LPTH) headfirst. Renaissance Technologies, established the biggest position in LightPath Technologies, Inc. (NASDAQ:LPTH). Renaissance Technologies had $0.2 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0 million investment in the stock during the quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as LightPath Technologies, Inc. (NASDAQ:LPTH) but similarly valued. These stocks are CVD Equipment Corporation (NASDAQ:CVV), KemPharm Inc (NASDAQ:KMPH), Cassava Sciences, Inc. (NASDAQ:SAVA), and China Green Agriculture, Inc (NYSE:CGA). All of these stocks' market caps match LPTH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CVV,3,939,0 KMPH,1,477,0 SAVA,1,1022,0 CGA,1,269,0 Average,1.5,677,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 1.5 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $1 million in LPTH's case. CVD Equipment Corporation (NASDAQ:CVV) is the most popular stock in this table. On the other hand KemPharm Inc (NASDAQ:KMPH) is the least popular one with only 1 bullish hedge fund positions. LightPath Technologies, Inc. (NASDAQ:LPTH) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately LPTH wasn't nearly as popular as these 20 stocks and hedge funds that were betting on LPTH were disappointed as the stock returned -31% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.