Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Lee Enterprises, Incorporated (NYSE:LEE) based on that data and determine whether they were really smart about the stock.
Lee Enterprises, Incorporated (NYSE:LEE) investors should be aware of an increase in support from the world's most elite money managers of late. Our calculations also showed that LEE isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: 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 a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_262336" align="aligncenter" width="396"] J. Carlo Cannell of Cannell Capital[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 states that pay the most federal taxes to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to review the new hedge fund action surrounding Lee Enterprises, Incorporated (NYSE:LEE).
How are hedge funds trading Lee Enterprises, Incorporated (NYSE:LEE)?
At Q1's end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 63% from the fourth quarter of 2019. By comparison, 12 hedge funds held shares or bullish call options in LEE a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Lee Enterprises, Incorporated (NYSE:LEE) was held by Cannell Capital, which reported holding $4.9 million worth of stock at the end of September. It was followed by Alden Global Capital with a $3.5 million position. Other investors bullish on the company included Omega Advisors, Sound Point Capital, and Winton Capital Management. In terms of the portfolio weights assigned to each position Cannell Capital allocated the biggest weight to Lee Enterprises, Incorporated (NYSE:LEE), around 2.02% of its 13F portfolio. Sound Point Capital is also relatively very bullish on the stock, setting aside 1.21 percent of its 13F equity portfolio to LEE.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Alden Global Capital, managed by Randall Smith, initiated the largest position in Lee Enterprises, Incorporated (NYSE:LEE). Alden Global Capital had $3.5 million invested in the company at the end of the quarter. Leon Cooperman's Omega Advisors also made a $0.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Steve Ketchum's Sound Point Capital, Matthew Hulsizer's PEAK6 Capital Management, and Frederick Tucker Golden's Solas Capital Management.
Let's check out hedge fund activity in other stocks similar to Lee Enterprises, Incorporated (NYSE:LEE). These stocks are Summit Midstream Partners LP (NYSE:SMLP), Four Seasons Education (Cayman) Inc. (NYSE:FEDU), Nephros, Inc. (NASDAQ:NEPH), and PFSweb, Inc. (NASDAQ:PFSW). This group of stocks' market values match LEE's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SMLP,1,17,-3 FEDU,4,1699,0 NEPH,5,23181,1 PFSW,5,9411,-1 Average,3.75,8577,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.75 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $10 million in LEE's case. Nephros, Inc. (NASDAQ:NEPH) is the most popular stock in this table. On the other hand Summit Midstream Partners LP (NYSE:SMLP) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Lee Enterprises, Incorporated (NYSE:LEE) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. Unfortunately LEE wasn't nearly as popular as these 10 stocks and hedge funds that were betting on LEE were disappointed as the stock returned -2% during the second quarter (through June 25th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.