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Is Lazard (LAZ) a Smart Long-term Buy?

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Longleaf Partners Small-Cap Fund, a Memphis-based fund under Southeastern Asset Management, recently released its Q3 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 22.2% for the quarter, outperforming its benchmark, the Russell 2000 Index which returned 4.93% in the same quarter. You should check out Longleaf Partners' top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.

In the Q3 2020 Investor Letter, Longleaf Partners highlighted a few stocks and Lazard Ltd (NYSE:LAZ) is one of them. Lazard Ltd (NYSE:LAZ) financial services company. Year-to-date, Lazard Ltd (NYSE:LAZ) stock gained 0.1% and on December 22nd it had a closing price of $39.95. Here is what Longleaf Partners said:

"Lazard (17%, 0.96%), the global asset management and investment banking company, was also a top contributor. During the quarter, Lazard’s AUM grew 11% as international markets rallied, and management revealed a strong backlog of new accounts to drive future inflows. Financial advisory revenues declined 11% YOY with the depressed number of M&A transactions outweighing strong growth in restructuring work. CEO Ken Jacobs has done excellent work to maintain the company’s profitability by reducing costs more than 10% in a challenging market environment. As earnings rebound with an improving 2021 M&A environment, we expect further strong appreciation from Lazard’s undervalued shares. In the meantime, Lazard’s free cash flow funds a hefty 5% dividend. The recent news of Morgan Stanley acquiring an inferior peer to Lazard Asset Management for a high multiple, as well as activists taking stakes in peers Janus Henderson and Invesco, should help to highlight the value of Lazard’s differentiated international asset management business. Lazard remains highly discounted versus our appraisal value, which has been growing again after the initial COVID pain."

Pixabay/Public Domain

In Q3 2020, the number of bullish hedge fund positions on Lazard Ltd (NYSE:LAZ) stock increased by about 6% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in Lazard's growth potential. Our calculations showed that Lazard Ltd (NYSE:LAZ) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website:

Disclosure: None. This article is originally published at Insider Monkey.