How do we determine whether The Liberty SiriusXM Group (NASDAQ:LSXMA) 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.
The Liberty SiriusXM Group (NASDAQ:LSXMA) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 39 hedge funds' portfolios at the end of the fourth quarter of 2018. 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 Celanese Corporation (NYSE:CE), Fortinet Inc (NASDAQ:FTNT), and Chipotle Mexican Grill, Inc. (NYSE:CMG) 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 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.
Let's go over the key hedge fund action surrounding The Liberty SiriusXM Group (NASDAQ:LSXMA).
What does the smart money think about The Liberty SiriusXM Group (NASDAQ:LSXMA)?
At the end of the fourth quarter, a total of 39 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 LSXMA over the last 14 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Among these funds, Berkshire Hathaway held the most valuable stake in The Liberty SiriusXM Group (NASDAQ:LSXMA), which was worth $546.9 million at the end of the third quarter. On the second spot was D E Shaw which amassed $150.5 million worth of shares. Moreover, FPR Partners, Citadel Investment Group, and Horizon Asset Management were also bullish on The Liberty SiriusXM Group (NASDAQ:LSXMA), allocating a large percentage of their portfolios to this stock.
Because The Liberty SiriusXM Group (NASDAQ:LSXMA) has witnessed declining sentiment from hedge fund managers, logic holds that there is a sect of hedge funds who were dropping their positions entirely by the end of the third quarter. It's worth mentioning that Ian Cumming and Joseph Steinberg's Leucadia National sold off the largest investment of the 700 funds followed by Insider Monkey, comprising close to $23.5 million in stock. Matthew Tewksbury's fund, Stevens Capital Management, also dropped its stock, about $1.3 million worth. These moves are interesting, 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 similar to The Liberty SiriusXM Group (NASDAQ:LSXMA). These stocks are Celanese Corporation (NYSE:CE), Fortinet Inc (NASDAQ:FTNT), Chipotle Mexican Grill, Inc. (NYSE:CMG), and Hess Corporation (NYSE:HES). This group of stocks' market caps are similar to LSXMA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CE,26,744447,-6 FTNT,33,907384,5 CMG,38,2036077,5 HES,36,1321563,-1 Average,33.25,1252368,0.75 [/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 $1252 million. That figure was $1272 million in LSXMA's case. Chipotle Mexican Grill, Inc. (NYSE:CMG) is the most popular stock in this table. On the other hand Celanese Corporation (NYSE:CE) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks The Liberty SiriusXM Group (NASDAQ:LSXMA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio. 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. Unfortunately LSXMA wasn't in this group. Hedge funds that bet on LSXMA were disappointed as the stock returned 12.9% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.