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In this article we will analyze whether Liberty Latin America Ltd. (NASDAQ:LILAK) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is LILAK a good stock to buy? Liberty Latin America Ltd. (NASDAQ:LILAK) has experienced a decrease in hedge fund interest recently. Liberty Latin America Ltd. (NASDAQ:LILAK) was in 29 hedge funds' portfolios at the end of March. The all time high for this statistic is 62. There were 30 hedge funds in our database with LILAK positions at the end of the fourth quarter. Our calculations also showed that LILAK isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the eyes of most traders, hedge funds are assumed to be underperforming, outdated financial vehicles of years past. While there are over 8000 funds in operation at present, We look at the upper echelon of this club, around 850 funds. It is estimated that this group of investors watch over the majority of the hedge fund industry's total asset base, and by monitoring their matchless stock picks, Insider Monkey has unsheathed a few investment strategies that have historically exceeded the market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Joshua Friedman of Canyon Capital Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let's take a look at the fresh hedge fund action surrounding Liberty Latin America Ltd. (NASDAQ:LILAK).
Do Hedge Funds Think LILAK Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in LILAK over the last 23 quarters. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, Ashe Capital held the most valuable stake in Liberty Latin America Ltd. (NASDAQ:LILAK), which was worth $160.9 million at the end of the fourth quarter. On the second spot was Two Creeks Capital Management which amassed $90.2 million worth of shares. Fine Capital Partners, Canyon Capital Advisors, and Wallace R. Weitz & Co. were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Fine Capital Partners allocated the biggest weight to Liberty Latin America Ltd. (NASDAQ:LILAK), around 14.07% of its 13F portfolio. Ashe Capital is also relatively very bullish on the stock, earmarking 10.97 percent of its 13F equity portfolio to LILAK.
Because Liberty Latin America Ltd. (NASDAQ:LILAK) has witnessed bearish sentiment from the aggregate hedge fund industry, it's safe to say that there is a sect of fund managers that slashed their full holdings by the end of the first quarter. Interestingly, Michael Larson's Bill & Melinda Gates Foundation Trust said goodbye to the largest investment of the "upper crust" of funds followed by Insider Monkey, worth an estimated $7.5 million in stock, and John Smith Clark's Southpoint Capital Advisors was right behind this move, as the fund said goodbye to about $7 million worth. These transactions are interesting, as total hedge fund interest dropped by 1 funds by the end of the first quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Liberty Latin America Ltd. (NASDAQ:LILAK) but similarly valued. We will take a look at Liberty Latin America Ltd. (NASDAQ:LILA), J&J Snack Foods Corp. (NASDAQ:JJSF), Herc Holdings Inc. (NYSE:HRI), Alkermes Plc (NASDAQ:ALKS), PriceSmart, Inc. (NASDAQ:PSMT), Baozun Inc (NASDAQ:BZUN), and Central Garden & Pet Co (NASDAQ:CENT). All of these stocks' market caps match LILAK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LILA,14,121187,-1 JJSF,15,69398,0 HRI,17,954627,2 ALKS,31,595809,1 PSMT,10,32204,-2 BZUN,11,41016,-3 CENT,12,178979,-8 Average,15.7,284746,-1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.7 hedge funds with bullish positions and the average amount invested in these stocks was $285 million. That figure was $512 million in LILAK's case. Alkermes Plc (NASDAQ:ALKS) is the most popular stock in this table. On the other hand PriceSmart, Inc. (NASDAQ:PSMT) is the least popular one with only 10 bullish hedge fund positions. Liberty Latin America Ltd. (NASDAQ:LILAK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LILAK is 63.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately LILAK wasn't nearly as popular as these 5 stocks and hedge funds that were betting on LILAK were disappointed as the stock returned 7.1% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.