It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards Lamar Advertising Co (NASDAQ:LAMR) during the quarter below.
Lamar Advertising Co (NASDAQ:LAMR) investors should be aware of an increase in activity from the world's largest hedge funds lately. LAMR was in 22 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 19 hedge funds in our database with LAMR positions at the end of the previous quarter. Our calculations also showed that LAMR isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 analyze the fresh hedge fund action surrounding Lamar Advertising Co (NASDAQ:LAMR).
What have hedge funds been doing with Lamar Advertising Co (NASDAQ:LAMR)?
Heading into the first quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from the second quarter of 2018. On the other hand, there were a total of 22 hedge funds with a bullish position in LAMR a year ago. With the smart money's capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Lamar Advertising Co (NASDAQ:LAMR), with a stake worth $147.7 million reported as of the end of September. Trailing Renaissance Technologies was Waratah Capital Advisors, which amassed a stake valued at $25.5 million. Millennium Management, Water Street Capital, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Now, some big names were leading the bulls' herd. GLG Partners, managed by Noam Gottesman, created the most valuable position in Lamar Advertising Co (NASDAQ:LAMR). GLG Partners had $6.6 million invested in the company at the end of the quarter. Ray Dalio's Bridgewater Associates also initiated a $1 million position during the quarter. The following funds were also among the new LAMR investors: Benjamin A. Smith's Laurion Capital Management, Matthew Hulsizer's PEAK6 Capital Management, and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Lamar Advertising Co (NASDAQ:LAMR) but similarly valued. These stocks are US Foods Holding Corp. (NYSE:USFD), Apartment Investment and Management Co. (NYSE:AIV), Tallgrass Energy, LP (NYSE:TGE), and Whirlpool Corporation (NYSE:WHR). All of these stocks' market caps resemble LAMR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position USFD,41,1206641,5 AIV,21,522693,3 TGE,8,21640,2 WHR,20,474650,-3 Average,22.5,556406,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $556 million. That figure was $252 million in LAMR's case. US Foods Holding Corp. (NYSE:USFD) is the most popular stock in this table. On the other hand Tallgrass Energy, LP (NYSE:TGE) is the least popular one with only 8 bullish hedge fund positions. Lamar Advertising Co (NASDAQ:LAMR) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that the top 15 most popular stocks among hedge funds returned 21.3% year-to-date through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Hedge funds were also right about betting on Lamar, though not to the same extent, as the stock returned 18.3% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.