We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Peltz's recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Liberty Broadband Corp (NASDAQ:LBRDK).
Is Liberty Broadband Corp (NASDAQ:LBRDK) the right pick for your portfolio? The best stock pickers are in a pessimistic mood. The number of bullish hedge fund bets went down by 2 in recent months. Our calculations also showed that LBRDK isn't among the 30 most popular stocks among hedge funds.
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 market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to view the fresh hedge fund action surrounding Liberty Broadband Corp (NASDAQ:LBRDK).
What does the smart money think about Liberty Broadband Corp (NASDAQ:LBRDK)?
Heading into the first quarter of 2019, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the previous quarter. By comparison, 37 hedge funds held shares or bullish call options in LBRDK a year ago. With the smart money's capital changing hands, there exists an "upper tier" of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Among these funds, Coatue Management held the most valuable stake in Liberty Broadband Corp (NASDAQ:LBRDK), which was worth $579.4 million at the end of the third quarter. On the second spot was Soros Fund Management which amassed $525.2 million worth of shares. Moreover, Eagle Capital Management, SQ Advisors, and Wallace R. Weitz & Co. were also bullish on Liberty Broadband Corp (NASDAQ:LBRDK), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Liberty Broadband Corp (NASDAQ:LBRDK) has witnessed a decline in interest from the smart money, it's easy to see that there exists a select few money managers that elected to cut their full holdings heading into Q3. Interestingly, Richard Gerson and Navroz D. Udwadia's Falcon Edge Capital dropped the largest investment of the 700 funds watched by Insider Monkey, totaling about $16.3 million in stock, and Eli Cohen's Crescent Park Management was right behind this move, as the fund sold off about $12.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds heading into Q3.
Let's go over hedge fund activity in other stocks similar to Liberty Broadband Corp (NASDAQ:LBRDK). These stocks are Vulcan Materials Company (NYSE:VMC), Liberty Broadband Corp (NASDAQ:LBRDA), Magellan Midstream Partners, L.P. (NYSE:MMP), and Weibo Corp (NASDAQ:WB). This group of stocks' market caps match LBRDK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VMC,41,1535477,6 LBRDA,19,498774,-3 MMP,12,86141,-2 WB,17,349440,-6 Average,22.25,617458,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $617 million. That figure was $2833 million in LBRDK's case. Vulcan Materials Company (NYSE:VMC) is the most popular stock in this table. On the other hand Magellan Midstream Partners, L.P. (NYSE:MMP) is the least popular one with only 12 bullish hedge fund positions. Liberty Broadband Corp (NASDAQ:LBRDK) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on Liberty Broadband as the stock returned 28.3% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.