Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Live Nation Entertainment, Inc. (NYSE:LYV).
Live Nation Entertainment, Inc. (NYSE:LYV) investors should be aware of an increase in activity from the world's largest hedge funds of late. Our calculations also showed that LYV isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). In this article we will also compare LYV's popularity against its peers such as Campbell Soup Company (NYSE:CPB), Nomura Holdings, Inc. (NYSE:NMR), Korea Electric Power Corporation (NYSE:KEP), and KB Financial Group, Inc. (NYSE:KB). 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 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_673253" align="aligncenter" width="1680"] Jeffrey Talpins of Element Capital[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's take a look at the recent hedge fund action regarding Live Nation Entertainment, Inc. (NYSE:LYV).
How have hedgies been trading Live Nation Entertainment, Inc. (NYSE:LYV)?
Heading into the fourth quarter of 2019, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the previous quarter. On the other hand, there were a total of 38 hedge funds with a bullish position in LYV a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Live Nation Entertainment, Inc. (NYSE:LYV) was held by Select Equity Group, which reported holding $523.6 million worth of stock at the end of September. It was followed by Horizon Asset Management with a $66.7 million position. Other investors bullish on the company included GAMCO Investors, EMS Capital, and Park West Asset Management. In terms of the portfolio weights assigned to each position Yost Capital Management allocated the biggest weight to Live Nation Entertainment, Inc. (NYSE:LYV), around 17.26% of its portfolio. Deep Field Asset Management is also relatively very bullish on the stock, setting aside 14.77 percent of its 13F equity portfolio to LYV.
Consequently, key money managers have jumped into Live Nation Entertainment, Inc. (NYSE:LYV) headfirst. Element Capital Management, managed by Jeffrey Talpins, established the most outsized position in Live Nation Entertainment, Inc. (NYSE:LYV). Element Capital Management had $18.4 million invested in the company at the end of the quarter. Christopher James's Partner Fund Management also made a $13.1 million investment in the stock during the quarter. The following funds were also among the new LYV investors: Israel Englander's Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and David E. Shaw's D E Shaw.
Let's now review hedge fund activity in other stocks similar to Live Nation Entertainment, Inc. (NYSE:LYV). These stocks are Campbell Soup Company (NYSE:CPB), Nomura Holdings, Inc. (NYSE:NMR), Korea Electric Power Corporation (NYSE:KEP), and KB Financial Group, Inc. (NYSE:KB). This group of stocks' market valuations are closest to LYV's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CPB,31,972740,5 NMR,5,24828,-2 KEP,6,43753,-1 KB,7,45753,-2 Average,12.25,271769,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $272 million. That figure was $1098 million in LYV's case. Campbell Soup Company (NYSE:CPB) is the most popular stock in this table. On the other hand Nomura Holdings, Inc. (NYSE:NMR) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Live Nation Entertainment, Inc. (NYSE:LYV) is more popular among hedge funds. 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 LYV wasn't nearly as popular as these 20 stocks and hedge funds that were betting on LYV were disappointed as the stock returned 5.2% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.