Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors' money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Hedge fund interest in Liberty Broadband Corp (NASDAQ:LBRDA) shares was flat at the end of last quarter. This is usually a negative indicator. 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 CBRE Group, Inc. (NYSE:CBRE), Restaurant Brands International Inc (NYSE:QSR), and Keysight Technologies Inc (NYSE:KEYS) to gather more data points.
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 market by 40 percentage points since May 2014 through May 30, 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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_30647" align="aligncenter" width="478"] Boykin Curry of Eagle Capital[/caption]
Let's view the recent hedge fund action regarding Liberty Broadband Corp (NASDAQ:LBRDA).
What does the smart money think about Liberty Broadband Corp (NASDAQ:LBRDA)?
At Q1's end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LBRDA over the last 15 quarters. With hedgies' capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Bob Peck and Andy Raab's FPR Partners has the most valuable position in Liberty Broadband Corp (NASDAQ:LBRDA), worth close to $128.2 million, accounting for 3.1% of its total 13F portfolio. On FPR Partners's heels is Eagle Capital Management, managed by Boykin Curry, which holds a $106.9 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism consist of D. E. Shaw's D E Shaw, William Crowley, William Harker, and Stephen Blass's Ashe Capital and Roberto Mignone's Bridger Management.
Seeing as Liberty Broadband Corp (NASDAQ:LBRDA) has experienced declining sentiment from the smart money, it's safe to say that there exists a select few hedge funds that slashed their positions entirely last quarter. It's worth mentioning that Glenn Russell Dubin's Highbridge Capital Management sold off the biggest investment of all the hedgies monitored by Insider Monkey, comprising about $11.1 million in stock. Joe DiMenna's fund, ZWEIG DIMENNA PARTNERS, also cut its stock, about $2.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Liberty Broadband Corp (NASDAQ:LBRDA) but similarly valued. These stocks are CBRE Group, Inc. (NYSE:CBRE), Restaurant Brands International Inc (NYSE:QSR), Keysight Technologies Inc (NYSE:KEYS), and L3 Technologies, Inc. (NYSE:LLL). This group of stocks' market caps are similar to LBRDA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CBRE,31,1403036,-3 QSR,37,3609311,0 KEYS,37,967108,3 LLL,28,1233217,6 Average,33.25,1803168,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.25 hedge funds with bullish positions and the average amount invested in these stocks was $1803 million. That figure was $580 million in LBRDA's case. Restaurant Brands International Inc (NYSE:QSR) is the most popular stock in this table. On the other hand L3 Technologies, Inc. (NYSE:LLL) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks Liberty Broadband Corp (NASDAQ:LBRDA) is even less popular than LLL. Hedge funds clearly dropped the ball on LBRDA as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on LBRDA as the stock returned 7.5% during the same period and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.