Is Lakeland Financial Corporation (NASDAQ:LKFN) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Lakeland Financial Corporation (NASDAQ:LKFN) going to take off soon? Prominent investors are becoming less hopeful. The number of long hedge fund bets fell by 1 in recent months. Our calculations also showed that LKFN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are numerous gauges stock traders can use to value publicly traded companies. A pair of the most underrated gauges are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can beat the broader indices by a superb margin (see the details here).
[caption id="attachment_26073" align="alignnone" width="600"] Jim Simons of Renaissance Technologies[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to take a glance at the key hedge fund action encompassing Lakeland Financial Corporation (NASDAQ:LKFN).
What have hedge funds been doing with Lakeland Financial Corporation (NASDAQ:LKFN)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from one quarter earlier. On the other hand, there were a total of 12 hedge funds with a bullish position in LKFN a year ago. With hedge funds' sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
The largest stake in Lakeland Financial Corporation (NASDAQ:LKFN) was held by Renaissance Technologies, which reported holding $11.8 million worth of stock at the end of September. It was followed by Millennium Management with a $2.2 million position. Other investors bullish on the company included Citadel Investment Group, PDT Partners, and Driehaus Capital. In terms of the portfolio weights assigned to each position PDT Partners allocated the biggest weight to Lakeland Financial Corporation (NASDAQ:LKFN), around 0.05% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to LKFN.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Tudor Investment Corp. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified LKFN as a viable investment and initiated a position in the stock.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Lakeland Financial Corporation (NASDAQ:LKFN) but similarly valued. These stocks are Editas Medicine, Inc. (NASDAQ:EDIT), Hudson Ltd. (NYSE:HUD), SRC Energy Inc. (NYSE:SRCI), and KKR Real Estate Finance Trust Inc. (NYSE:KREF). This group of stocks' market values resemble LKFN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EDIT,11,100575,-3 HUD,12,31637,0 SRCI,20,245795,1 KREF,8,52402,-1 Average,12.75,107602,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $108 million. That figure was $20 million in LKFN's case. SRC Energy Inc. (NYSE:SRCI) is the most popular stock in this table. On the other hand KKR Real Estate Finance Trust Inc. (NYSE:KREF) is the least popular one with only 8 bullish hedge fund positions. Lakeland Financial Corporation (NASDAQ:LKFN) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on LKFN, though not to the same extent, as the stock returned 7.8% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.