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In this article we will analyze whether Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA) 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 LOMA a good stock to buy now? Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA) investors should pay attention to a decrease in hedge fund sentiment lately. Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA) was in 9 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 18. Our calculations also showed that LOMA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Howard Marks of Oaktree Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let's view the new hedge fund action regarding Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA).
Do Hedge Funds Think LOMA Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LOMA over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Redwood Capital Management was the largest shareholder of Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA), with a stake worth $28 million reported as of the end of September. Trailing Redwood Capital Management was International Value Advisers, which amassed a stake valued at $3.8 million. Millennium Management, Oaktree Capital Management, and Renaissance Technologies 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 Redwood Capital Management allocated the biggest weight to Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA), around 2.13% of its 13F portfolio. International Value Advisers is also relatively very bullish on the stock, setting aside 0.44 percent of its 13F equity portfolio to LOMA.
Judging by the fact that Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain "tier" of hedge funds that elected to cut their positions entirely by the end of the third quarter. Intriguingly, Ken Griffin's Citadel Investment Group said goodbye to the biggest stake of the "upper crust" of funds tracked by Insider Monkey, totaling close to $0.2 million in stock. Bruce J. Richards and Louis Hanover's fund, Marathon Asset Management, also dropped its stock, about $0.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 2 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA) but similarly valued. We will take a look at Front Yard Residential Corporation (NYSE:RESI), Flexion Therapeutics Inc (NASDAQ:FLXN), Globalstar, Inc. (NYSE:GSAT), FuelCell Energy, Inc. (NASDAQ:FCEL), Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN), CarParts.com, Inc. (NASDAQ:PRTS), and Great Southern Bancorp, Inc. (NASDAQ:GSBC). This group of stocks' market caps are closest to LOMA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RESI,20,56519,-5 FLXN,17,121644,2 GSAT,11,49117,2 FCEL,17,35393,9 MAXN,5,17787,5 PRTS,22,149170,8 GSBC,7,20795,-3 Average,14.1,64346,2.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $37 million in LOMA's case. CarParts.com, Inc. (NASDAQ:PRTS) is the most popular stock in this table. On the other hand Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN) is the least popular one with only 5 bullish hedge fund positions. Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LOMA is 29.8. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on LOMA as the stock returned 38.1% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.