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In this article you are going to find out whether hedge funds think The Liberty SiriusXM Group (NASDAQ:LSXMA) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
The Liberty SiriusXM Group (NASDAQ:LSXMA) was in 38 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 50. LSXMA has experienced a decrease in support from the world's most elite money managers of late. There were 42 hedge funds in our database with LSXMA positions at the end of the fourth quarter. Our calculations also showed that LSXMA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Seth Klarman of Baupost Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we're going to analyze the latest hedge fund action encompassing The Liberty SiriusXM Group (NASDAQ:LSXMA).
Do Hedge Funds Think LSXMA Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards LSXMA over the last 23 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
The largest stake in The Liberty SiriusXM Group (NASDAQ:LSXMA) was held by Berkshire Hathaway, which reported holding $655 million worth of stock at the end of December. It was followed by D E Shaw with a $202.8 million position. Other investors bullish on the company included Baupost Group, Citadel Investment Group, and FPR Partners. In terms of the portfolio weights assigned to each position Raging Capital Management allocated the biggest weight to The Liberty SiriusXM Group (NASDAQ:LSXMA), around 29.35% of its 13F portfolio. Isomer Partners is also relatively very bullish on the stock, earmarking 4.96 percent of its 13F equity portfolio to LSXMA.
Judging by the fact that The Liberty SiriusXM Group (NASDAQ:LSXMA) has faced a decline in interest from the entirety of the hedge funds we track, logic holds that there exists a select few funds that elected to cut their entire stakes last quarter. Intriguingly, Jeffrey Bronchick's Cove Street Capital sold off the biggest investment of all the hedgies tracked by Insider Monkey, valued at close to $6.8 million in stock. Tim Mullen's fund, Swift Run Capital Management, also said goodbye to its stock, about $1.8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 4 funds last quarter.
Let's also examine hedge fund activity in other stocks similar to The Liberty SiriusXM Group (NASDAQ:LSXMA). These stocks are Smith & Nephew plc (NYSE:SNN), Brookfield Property Partners LP (NYSE:BPY), Akamai Technologies, Inc. (NASDAQ:AKAM), Cincinnati Financial Corporation (NASDAQ:CINF), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), Mid America Apartment Communities Inc (NYSE:MAA), and ASE Technology Holding Co., Ltd. (NYSE:ASX). This group of stocks' market values are closest to LSXMA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SNN,11,42029,-1 BPY,17,205102,8 AKAM,25,206922,-8 CINF,22,886358,2 ALNY,33,740380,-6 MAA,25,251877,-1 ASX,8,232071,-1 Average,20.1,366391,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.1 hedge funds with bullish positions and the average amount invested in these stocks was $366 million. That figure was $1727 million in LSXMA's case. Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) is the most popular stock in this table. On the other hand ASE Technology Holding Co., Ltd. (NYSE:ASX) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks The Liberty SiriusXM Group (NASDAQ:LSXMA) is more popular among hedge funds. Our overall hedge fund sentiment score for LSXMA is 73.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Unfortunately LSXMA wasn't nearly as popular as these 5 stocks and hedge funds that were betting on LSXMA were disappointed as the stock returned 7.6% since the end of the first quarter (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.