The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtLoma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA) investors should be aware of an increase in support from the world's most elite money managers lately. Our calculations also showed that LOMA isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_758454" align="aligncenter" width="386"] James Dondero of Highland Capital Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's review the fresh hedge fund action encompassing Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA).
What have hedge funds been doing with Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA)?
Heading into the second quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 71% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in LOMA a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Redwood Capital Management was the largest shareholder of Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA), with a stake worth $16.5 million reported as of the end of September. Trailing Redwood Capital Management was International Value Advisers, which amassed a stake valued at $9.7 million. Marathon Asset Management, Oaktree Capital Management, and Highland Capital Management 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 3.01% of its 13F portfolio. International Value Advisers is also relatively very bullish on the stock, dishing out 0.61 percent of its 13F equity portfolio to LOMA.
Consequently, key money managers have jumped into Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the largest position in Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA). Marshall Wace LLP had $0.3 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $0.1 million position during the quarter. The other funds with new positions in the stock are Israel Englander's Millennium Management, Greg Eisner's Engineers Gate Manager, and Matthew Hulsizer's PEAK6 Capital Management.
Let's check out 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 PBF Logistics LP (NYSE:PBFX), Geopark Ltd (NYSE:GPRK), ProSight Global, Inc. (NYSE:PROS), and TPG RE Finance Trust, Inc. (NYSE:TRTX). All of these stocks' market caps match LOMA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PBFX,3,870,0 GPRK,13,49368,2 PROS,4,3547,0 TRTX,17,29436,2 Average,9.25,20805,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $31 million in LOMA's case. TPG RE Finance Trust, Inc. (NYSE:TRTX) is the most popular stock in this table. On the other hand PBF Logistics LP (NYSE:PBFX) is the least popular one with only 3 bullish hedge fund positions. Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA) 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately LOMA wasn't nearly as popular as these 10 stocks and hedge funds that were betting on LOMA were disappointed as the stock returned 20% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.