Is Life Storage, Inc. (NYSE:LSI) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. 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 find the winners in the stock market.
Life Storage, Inc. (NYSE:LSI) was in 13 hedge funds' portfolios at the end of the fourth quarter of 2018. LSI has experienced an increase in hedge fund interest lately. There were 12 hedge funds in our database with LSI holdings at the end of the previous quarter. Our calculations also showed that LSI isn't among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We're going to take a gander at the recent hedge fund action surrounding Life Storage, Inc. (NYSE:LSI).
How have hedgies been trading Life Storage, Inc. (NYSE:LSI)?
Heading into the first quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the second quarter of 2018. By comparison, 15 hedge funds held shares or bullish call options in LSI a year ago. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Life Storage, Inc. (NYSE:LSI). Renaissance Technologies has a $72 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Ken Fisher of Fisher Asset Management, with a $46.9 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions encompass David Harding's Winton Capital Management, Dmitry Balyasny's Balyasny Asset Management and D. E. Shaw's D E Shaw.
As industrywide interest jumped, key money managers have been driving this bullishness. Winton Capital Management, managed by David Harding, created the largest position in Life Storage, Inc. (NYSE:LSI). Winton Capital Management had $16.9 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also initiated a $1.6 million position during the quarter. The other funds with new positions in the stock are Benjamin A. Smith's Laurion Capital Management, Michael Gelband's ExodusPoint Capital, and David Costen Haley's HBK Investments.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Life Storage, Inc. (NYSE:LSI) but similarly valued. These stocks are Oshkosh Corporation (NYSE:OSK), Axis Capital Holdings Limited (NYSE:AXS), Littelfuse, Inc. (NASDAQ:LFUS), and Semiconductor Manufacturing International Corporation (NYSE:SMI). This group of stocks' market values match LSI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OSK,29,384530,-1 AXS,30,716155,9 LFUS,15,254089,-7 SMI,4,6566,-1 Average,19.5,340335,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $340 million. That figure was $159 million in LSI's case. Axis Capital Holdings Limited (NYSE:AXS) is the most popular stock in this table. On the other hand Semiconductor Manufacturing International Corporation (NYSE:SMI) is the least popular one with only 4 bullish hedge fund positions. Life Storage, Inc. (NYSE:LSI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately LSI wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); LSI investors were disappointed as the stock returned 1.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.