Coronavirus is probably the #1 concern in investors' minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (read our latest 10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. With this in mind let's see whether Live Nation Entertainment, Inc. (NYSE:LYV) makes for a good investment at the moment. We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Live Nation Entertainment, Inc. (NYSE:LYV) shares haven't seen a lot of action during the fourth quarter. Overall, hedge fund sentiment was unchanged. The stock was in 44 hedge funds' portfolios at the end of the fourth quarter of 2019. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Principal Financial Group Inc (NYSE:PFG), SK Telecom Co., Ltd. (NYSE:SKM), and The Liberty SiriusXM Group (NASDAQ:LSXMK) to gather more data points. Our calculations also showed that LYV isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Ken Griffin of Citadel Investment Group
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. Now we're going to take a peek at the latest hedge fund action encompassing Live Nation Entertainment, Inc. (NYSE:LYV).
Hedge fund activity in Live Nation Entertainment, Inc. (NYSE:LYV)
Heading into the first quarter of 2020, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards LYV over the last 18 quarters. So, let's see 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 $630.6 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $146.6 million position. Other investors bullish on the company included Jericho Capital Asset Management, Park West Asset Management, and EMS Capital. 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 15.79% of its 13F portfolio. Deep Field Asset Management is also relatively very bullish on the stock, designating 12.68 percent of its 13F equity portfolio to LYV.
Judging by the fact that Live Nation Entertainment, Inc. (NYSE:LYV) has experienced declining sentiment from the smart money, logic holds that there lies a certain "tier" of hedge funds that slashed their entire stakes in the third quarter. Interestingly, Jeffrey Talpins's Element Capital Management said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, totaling about $18.4 million in stock. Principal Global Investors's fund, Columbus Circle Investors, also dropped its stock, about $17.4 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks similar to Live Nation Entertainment, Inc. (NYSE:LYV). These stocks are Principal Financial Group Inc (NYSE:PFG), SK Telecom Co., Ltd. (NYSE:SKM), The Liberty SiriusXM Group (NASDAQ:LSXMK), and BioMarin Pharmaceutical Inc. (NASDAQ:BMRN). All of these stocks' market caps resemble LYV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PFG,20,89558,0 SKM,6,135263,-1 LSXMK,54,3333126,5 BMRN,49,1937452,0 Average,32.25,1373850,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.25 hedge funds with bullish positions and the average amount invested in these stocks was $1374 million. That figure was $1666 million in LYV's case. The Liberty SiriusXM Group (NASDAQ:LSXMK) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (NYSE:SKM) is the least popular one with only 6 bullish hedge fund positions. Live Nation Entertainment, Inc. (NYSE:LYV) 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 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 -49.2% during the same time period 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.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.