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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 887 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 December 31st. In this article we look at what those investors think of Lamb Weston Holdings, Inc. (NYSE:LW).
Is LW stock a buy? Money managers were taking an optimistic view. The number of bullish hedge fund bets advanced by 2 in recent months. Lamb Weston Holdings, Inc. (NYSE:LW) was in 29 hedge funds' portfolios at the end of December. The all time high for this statistic is 42. Our calculations also showed that LW isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 27 hedge funds in our database with LW 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).
David Harding of Winton Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 we're going to take a gander at the recent hedge fund action regarding Lamb Weston Holdings, Inc. (NYSE:LW).
Do Hedge Funds Think LW Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in LW over the last 22 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Lamb Weston Holdings, Inc. (NYSE:LW) was held by Candlestick Capital Management, which reported holding $84.6 million worth of stock at the end of December. It was followed by BlueDrive Global Investors with a $64.6 million position. Other investors bullish on the company included Millennium Management, Point72 Asset Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position BlueDrive Global Investors allocated the biggest weight to Lamb Weston Holdings, Inc. (NYSE:LW), around 13.96% of its 13F portfolio. Candlestick Capital Management is also relatively very bullish on the stock, earmarking 1.98 percent of its 13F equity portfolio to LW.
As industrywide interest jumped, key hedge funds were leading the bulls' herd. BlueDrive Global Investors, managed by Oscar Hattink, assembled the most valuable position in Lamb Weston Holdings, Inc. (NYSE:LW). BlueDrive Global Investors had $64.6 million invested in the company at the end of the quarter. Gregg Moskowitz's Interval Partners also initiated a $1.5 million position during the quarter. The other funds with new positions in the stock are Richard Schimel and Lawrence Sapanski's Cinctive Capital Management, Matthew Hulsizer's PEAK6 Capital Management, and David Harding's Winton Capital Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Lamb Weston Holdings, Inc. (NYSE:LW) but similarly valued. We will take a look at Five9 Inc (NASDAQ:FIVN), Fidelity National Financial Inc (NYSE:FNF), Concho Resources Inc. (NYSE:CXO), WestRock Company (NYSE:WRK), DENTSPLY SIRONA Inc. (NASDAQ:XRAY), Equitable Holdings, Inc. (NYSE:EQH), and Appian Corporation (NASDAQ:APPN). This group of stocks' market caps match LW's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FIVN,47,1929875,0 FNF,40,1337274,-4 CXO,41,1045563,-6 WRK,43,668766,11 XRAY,28,1224435,3 EQH,46,1269636,10 APPN,24,1163680,9 Average,38.4,1234176,3.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.4 hedge funds with bullish positions and the average amount invested in these stocks was $1234 million. That figure was $335 million in LW's case. Five9 Inc (NASDAQ:FIVN) is the most popular stock in this table. On the other hand Appian Corporation (NASDAQ:APPN) is the least popular one with only 24 bullish hedge fund positions. Lamb Weston Holdings, Inc. (NYSE:LW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LW is 38.6. 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. 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 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 gained 12.2% in 2021 through April 12th and surpassed the market again by 1.5 percentage points. Unfortunately LW wasn't nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); LW investors were disappointed as the stock returned 0.2% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.