At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Tiger Global because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Liberty Global PLC LiLAC Class A (NASDAQ:LILA) investors should pay attention to a decrease in hedge fund sentiment recently. LILA was in 11 hedge funds' portfolios at the end of June. There were 14 hedge funds in our database with LILA positions at the end of the previous quarter. Our calculations also showed that LILA isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are a large number of metrics shareholders use to size up their stock investments. Some of the most underrated metrics are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the elite investment managers can beat their index-focused peers by a significant amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to go over the new hedge fund action encompassing Liberty Global PLC LiLAC Class A (NASDAQ:LILA).
Hedge fund activity in Liberty Global PLC LiLAC Class A (NASDAQ:LILA)
At Q2's end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in LILA a year ago. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in Liberty Global PLC LiLAC Class A (NASDAQ:LILA) was held by Ashe Capital, which reported holding $69.1 million worth of stock at the end of March. It was followed by Berkshire Hathaway with a $46.8 million position. Other investors bullish on the company included Two Creeks Capital Management, Bill & Melinda Gates Foundation Trust, and Marshall Wace LLP.
Since Liberty Global PLC LiLAC Class A (NASDAQ:LILA) has faced a decline in interest from the aggregate hedge fund industry, it's safe to say that there exists a select few funds that slashed their full holdings last quarter. At the top of the heap, Jeffrey Bronchick's Cove Street Capital said goodbye to the biggest stake of the 750 funds watched by Insider Monkey, totaling an estimated $1.2 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital was right behind this move, as the fund dropped about $0.8 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 3 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Liberty Global PLC LiLAC Class A (NASDAQ:LILA) but similarly valued. These stocks are LiLAC Group (NASDAQ:LILAK), Brookfield Business Partners L.P. (NYSE:BBU), Investors Bancorp, Inc. (NASDAQ:ISBC), and TreeHouse Foods Inc. (NYSE:THS). This group of stocks' market valuations are similar to LILA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LILAK,22,396567,4 BBU,5,12411,0 ISBC,23,569055,-1 THS,17,142178,-6 Average,16.75,280053,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $280 million. That figure was $145 million in LILA's case. Investors Bancorp, Inc. (NASDAQ:ISBC) is the most popular stock in this table. On the other hand Brookfield Business Partners L.P. (NYSE:BBU) is the least popular one with only 5 bullish hedge fund positions. Liberty Global PLC LiLAC Class A (NASDAQ:LILA) 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately LILA wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); LILA investors were disappointed as the stock returned -0.9% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.