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Liberty Media Corporation (LSXMA) vs. Top 20 Hedge Fund Stocks in 2019

Debasis Saha

Last year's fourth quarter was a rough one for investors and 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. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 41.1% in 2019 (through December 23) and outperformed the S&P 500 ETF by more than 10 percentage points. In this article we will study how hedge fund sentiment towards Liberty Media Corporation (NASDAQ:LSXMA) changed during the third quarter and how the stock performed in comparison to hedge fund consensus stocks.

Liberty Media Corporation (NASDAQ:LSXMA) was in 39 hedge funds' portfolios at the end of the third quarter of 2019. LSXMA has seen an increase in hedge fund sentiment lately. There were 34 hedge funds in our database with LSXMA holdings at the end of the previous quarter. Our calculations also showed that LSXMA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_315178" align="alignnone" width="600"] Warren Buffett of Berkshire Hathaway[/caption]

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Now we're going to review the latest hedge fund action regarding Liberty Media Corporation (NASDAQ:LSXMA).

What does smart money think about Liberty Media Corporation (NASDAQ:LSXMA)?

Heading into the fourth quarter of 2019, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the second quarter of 2019. By comparison, 39 hedge funds held shares or bullish call options in LSXMA a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Is LSXMA A Good Stock To Buy?

Among these funds, Berkshire Hathaway held the most valuable stake in Liberty Media Corporation (NASDAQ:LSXMA), which was worth $617.7 million at the end of the third quarter. On the second spot was D E Shaw which amassed $140.1 million worth of shares. FPR Partners, Citadel Investment Group, and Senator Investment Group 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 Swift Run Capital Management allocated the biggest weight to Liberty Media Corporation (NASDAQ:LSXMA), around 5.87% of its 13F portfolio. Tiger Eye Capital is also relatively very bullish on the stock, dishing out 5.81 percent of its 13F equity portfolio to LSXMA.

Now, key hedge funds were leading the bulls' herd. Tiger Eye Capital, managed by Ben Gambill, assembled the largest position in Liberty Media Corporation (NASDAQ:LSXMA). Tiger Eye Capital had $22.1 million invested in the company at the end of the quarter. Clint Carlson's Carlson Capital also initiated a $3.2 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Michael Gelband's ExodusPoint Capital, and Benjamin A. Smith's Laurion Capital Management.

Let's check out hedge fund activity in other stocks similar to Liberty Media Corporation (NASDAQ:LSXMA). These stocks are CrowdStrike Holdings, Inc. (NASDAQ:CRWD), Universal Health Services, Inc. (NYSE:UHS), Vistra Energy Corp. (NYSE:VST), and Fortinet Inc (NASDAQ:FTNT). This group of stocks' market values are closest to LSXMA's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CRWD,28,273644,-13 UHS,26,562518,2 VST,42,2382348,3 FTNT,38,1187931,4 Average,33.5,1101610,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.5 hedge funds with bullish positions and the average amount invested in these stocks was $1102 million. That figure was $1485 million in LSXMA's case. Vistra Energy Corp. (NYSE:VST) is the most popular stock in this table. On the other hand Universal Health Services, Inc. (NYSE:UHS) is the least popular one with only 26 bullish hedge fund positions. Liberty Media Corporation (NASDAQ:LSXMA) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately LSXMA wasn't nearly as popular as these 20 stocks and hedge funds that were betting on LSXMA were disappointed as the stock returned 30.8% in 2019 (through December 23rd) 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 this year. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

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