We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Peltz's recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Live Nation Entertainment, Inc. (NYSE:LYV).
Live Nation Entertainment, Inc. (NYSE:LYV) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 39 hedge funds' portfolios at the end of June. 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 Icahn Enterprises LP (NASDAQ:IEP), Huntington Bancshares Incorporated (NASDAQ:HBAN), and WellCare Health Plans, Inc. (NYSE:WCG) to gather more data points.
In the financial world there are a multitude of methods market participants employ to value their stock investments. Two of the most under-the-radar methods are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outperform the broader indices by a solid amount (see the details here).
Unlike some fund managers who are betting on Dow reaching 40000 in a year, 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. Let's review the fresh hedge fund action encompassing Live Nation Entertainment, Inc. (NYSE:LYV).
Hedge fund activity in Live Nation Entertainment, Inc. (NYSE:LYV)
Heading into the third quarter of 2019, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 32 hedge funds with a bullish position in LYV a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Select Equity Group was the largest shareholder of Live Nation Entertainment, Inc. (NYSE:LYV), with a stake worth $423.2 million reported as of the end of March. Trailing Select Equity Group was Horizon Asset Management, which amassed a stake valued at $68 million. GAMCO Investors, EMS Capital, and Diamond Hill Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Live Nation Entertainment, Inc. (NYSE:LYV) has faced falling interest from the smart money, logic holds that there is a sect of funds that slashed their entire stakes in the second quarter. Intriguingly, Christopher James's Partner Fund Management said goodbye to the biggest position of the "upper crust" of funds followed by Insider Monkey, comprising about $32.7 million in stock. Glenn Russell Dubin's fund, Highbridge Capital Management, also sold off its stock, about $10.2 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Live Nation Entertainment, Inc. (NYSE:LYV) but similarly valued. These stocks are Icahn Enterprises LP (NASDAQ:IEP), Huntington Bancshares Incorporated (NASDAQ:HBAN), WellCare Health Plans, Inc. (NYSE:WCG), and Martin Marietta Materials, Inc. (NYSE:MLM). This group of stocks' market caps resemble LYV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IEP,5,13553559,0 HBAN,23,67157,-5 WCG,46,1800255,-1 MLM,40,2473921,4 Average,28.5,4473723,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $4474 million. That figure was $981 million in LYV's case. WellCare Health Plans, Inc. (NYSE:WCG) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 5 bullish hedge fund positions. Live Nation Entertainment, Inc. (NYSE:LYV) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately LYV wasn't nearly as popular as these 20 stocks and hedge funds that were betting on LYV were disappointed as the stock returned 0.1% 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 (view the video below) 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.
Disclosure: None. This article was originally published at Insider Monkey.