Is Lamar Advertising Company (REIT) (NASDAQ:LAMR) a good investment right now? Lamar is a top 10 holding for the Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (SRVR). We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Lamar Advertising Company (REIT) (NASDAQ:LAMR) worth your attention right now? Prominent investors are taking a bullish view. The number of bullish hedge fund bets rose by 4 in recent months. Our calculations also showed that LAMR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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.
[caption id="attachment_42139" align="aligncenter" width="504"] Ken Heebner of Capital Growth Management[/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 fresh hedge fund action encompassing Lamar Advertising Company (REIT) (NASDAQ:LAMR).
Hedge fund activity in Lamar Advertising Company (REIT) (NASDAQ:LAMR)
At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in LAMR over the last 17 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Lamar Advertising Company (REIT) (NASDAQ:LAMR), with a stake worth $160.7 million reported as of the end of September. Trailing Renaissance Technologies was Water Street Capital, which amassed a stake valued at $13.2 million. Echo Street Capital Management, Grisanti Brown & Partners, and Two Sigma Advisors 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 Grisanti Brown & Partners allocated the biggest weight to Lamar Advertising Company (REIT) (NASDAQ:LAMR), around 4.34% of its portfolio. Water Street Capital is also relatively very bullish on the stock, dishing out 1.03 percent of its 13F equity portfolio to LAMR.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Echo Street Capital Management, managed by Greg Poole, established the most valuable position in Lamar Advertising Company (REIT) (NASDAQ:LAMR). Echo Street Capital Management had $11.5 million invested in the company at the end of the quarter. Ken Heebner's Capital Growth Management also initiated a $4.9 million position during the quarter. The other funds with brand new LAMR positions are Paul Tudor Jones's Tudor Investment Corp, David E. Shaw's D E Shaw, and Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners.
Let's now review 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 Tradeweb Markets Inc. (NASDAQ:TW), Gaming and Leisure Properties Inc (NASDAQ:GLPI), National Oilwell Varco, Inc. (NYSE:NOV), and Under Armour Inc (NYSE:UA). This group of stocks' market caps match LAMR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TW,37,400592,0 GLPI,31,773259,4 NOV,23,894471,1 UA,32,921157,-6 Average,30.75,747370,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.75 hedge funds with bullish positions and the average amount invested in these stocks was $747 million. That figure was $238 million in LAMR's case. Tradeweb Markets Inc. (NASDAQ:TW) is the most popular stock in this table. On the other hand National Oilwell Varco, Inc. (NYSE:NOV) is the least popular one with only 23 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. This is a slightly negative signal and 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 LAMR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); LAMR investors were disappointed as the stock returned 1.8% 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.