Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Lifetime Brands Inc (NASDAQ:LCUT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Lifetime Brands Inc (NASDAQ:LCUT) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of September. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Energy Fuels Inc. (NYSE:UUUU), Unit Corporation (NYSE:UNT), and The Community Financial Corporation (NASDAQ:TCFC) to gather more data points. Our calculations also showed that LCUT isn't among the 30 most popular stocks among hedge funds.
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_193003" align="aligncenter" width="450"] Chuck Royce of Royce & Associates[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a look at the recent hedge fund action regarding Lifetime Brands Inc (NASDAQ:LCUT).
What have hedge funds been doing with Lifetime Brands Inc (NASDAQ:LCUT)?
Heading into the fourth quarter of 2019, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 3 hedge funds held shares or bullish call options in LCUT a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Thomas E. Lynch's Mill Road Capital Management has the most valuable position in Lifetime Brands Inc (NASDAQ:LCUT), worth close to $14.4 million, amounting to 23% of its total 13F portfolio. Coming in second is Royce & Associates, led by Chuck Royce, holding a $1.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. In terms of the portfolio weights assigned to each position Mill Road Capital Management allocated the biggest weight to Lifetime Brands Inc (NASDAQ:LCUT), around 23.02% of its portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to LCUT.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Lifetime Brands Inc (NASDAQ:LCUT) but similarly valued. We will take a look at Energy Fuels Inc. (NYSE:UUUU), Unit Corporation (NYSE:UNT), The Community Financial Corporation (NASDAQ:TCFC), and ESSA Bancorp, Inc. (NASDAQ:ESSA). This group of stocks' market caps resemble LCUT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UUUU,6,2448,-3 UNT,9,4396,1 TCFC,2,8374,0 ESSA,2,11989,0 Average,4.75,6802,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $16 million in LCUT's case. Unit Corporation (NYSE:UNT) is the most popular stock in this table. On the other hand The Community Financial Corporation (NASDAQ:TCFC) is the least popular one with only 2 bullish hedge fund positions. Lifetime Brands Inc (NASDAQ:LCUT) 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 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately LCUT wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); LCUT investors were disappointed as the stock returned -27.2% during the fourth quarter (through 11/22) 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.