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After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of December 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Louisiana-Pacific Corporation (NYSE:LPX).
Is LPX stock a buy or sell? The smart money was betting on the stock. The number of long hedge fund positions rose by 1 in recent months. Louisiana-Pacific Corporation (NYSE:LPX) was in 41 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 40. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that LPX isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 40 hedge funds in our database with LPX positions at the end of the third quarter.
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 124 percentage points since March 2017 (see the details here).
Peter Rathjens of Arrowstreet Capital
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Do Hedge Funds Think LPX Is A Good Stock To Buy Now?
At the end of December, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the third quarter of 2020. By comparison, 29 hedge funds held shares or bullish call options in LPX 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.
According to Insider Monkey's hedge fund database, Platinum Asset Management, managed by Kerr Neilson, holds the largest position in Louisiana-Pacific Corporation (NYSE:LPX). Platinum Asset Management has a $76.2 million position in the stock, comprising 1.8% of its 13F portfolio. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $63.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism encompass Alexander Mitchell's Scopus Asset Management, D. E. Shaw's D E Shaw and Robert Bishop's Impala Asset Management. In terms of the portfolio weights assigned to each position Voss Capital allocated the biggest weight to Louisiana-Pacific Corporation (NYSE:LPX), around 3.84% of its 13F portfolio. Impala Asset Management is also relatively very bullish on the stock, setting aside 3.67 percent of its 13F equity portfolio to LPX.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Sandbar Asset Management, managed by Michael Cowley, established the biggest position in Louisiana-Pacific Corporation (NYSE:LPX). Sandbar Asset Management had $16.1 million invested in the company at the end of the quarter. Andrew Byington's Appian Way Asset Management also initiated a $6.2 million position during the quarter. The other funds with new positions in the stock are Nick Thakore's Diametric Capital, Paul Marshall and Ian Wace's Marshall Wace LLP, and Phil Frohlich's Prescott Group Capital Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Louisiana-Pacific Corporation (NYSE:LPX) but similarly valued. These stocks are Innovative Industrial Properties, Inc. (NYSE:IIPR), Simpson Manufacturing Co, Inc. (NYSE:SSD), Cannae Holdings, Inc. (NYSE:CNNE), Atlantica Sustainable Infrastructure plc (NASDAQ:AY), Hexcel Corporation (NYSE:HXL), Bank OZK (NASDAQ:OZK), and Aerojet Rocketdyne Holdings Inc (NYSE:AJRD). This group of stocks' market caps resemble LPX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IIPR,23,317685,3 SSD,25,219735,8 CNNE,34,534239,5 AY,14,98156,3 HXL,25,166619,5 OZK,20,260732,0 AJRD,36,802349,10 Average,25.3,342788,4.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $343 million. That figure was $526 million in LPX's case. Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) is the most popular stock in this table. On the other hand Atlantica Sustainable Infrastructure plc (NASDAQ:AY) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Louisiana-Pacific Corporation (NYSE:LPX) is more popular among hedge funds. Our overall hedge fund sentiment score for LPX is 86. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on LPX as the stock returned 45.5% since the end of December (through 3/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.