At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards La-Z-Boy Incorporated (NYSE:LZB).
Is LZB a good stock to buy? La-Z-Boy Incorporated (NYSE:LZB) was in 20 hedge funds' portfolios at the end of September. The all time high for this statistic is 25. LZB has experienced a decrease in activity from the world's largest hedge funds recently. There were 21 hedge funds in our database with LZB holdings at the end of June. Our calculations also showed that LZB 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.
To the average investor there are numerous gauges shareholders use to evaluate their holdings. Two of the most underrated gauges are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top money managers can trounce the broader indices by a significant margin (see the details here).
Steven Cohen of Point72 Asset 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. With all of this in mind we're going to take a glance at the new hedge fund action encompassing La-Z-Boy Incorporated (NYSE:LZB).
Do Hedge Funds Think LZB Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. On the other hand, there were a total of 25 hedge funds with a bullish position in LZB a year ago. With the smart money's capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the number one position in La-Z-Boy Incorporated (NYSE:LZB). Arrowstreet Capital has a $18.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Arrowstreet Capital's heels is Mario Gabelli of GAMCO Investors, with a $11.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that hold long positions consist of D. E. Shaw's D E Shaw, Dmitry Balyasny's Balyasny Asset Management and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position SG Capital Management allocated the biggest weight to La-Z-Boy Incorporated (NYSE:LZB), around 0.37% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, designating 0.23 percent of its 13F equity portfolio to LZB.
Judging by the fact that La-Z-Boy Incorporated (NYSE:LZB) has experienced declining sentiment from hedge fund managers, it's safe to say that there exists a select few hedgies who sold off their entire stakes heading into Q4. Interestingly, Renaissance Technologies sold off the largest position of the "upper crust" of funds tracked by Insider Monkey, comprising about $4.5 million in stock, and Paul Tudor Jones's Tudor Investment Corp was right behind this move, as the fund dropped about $0.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as La-Z-Boy Incorporated (NYSE:LZB) but similarly valued. We will take a look at Onto Innovation Inc. (NYSE:ONTO), Health Catalyst, Inc (NASDAQ:HCAT), Domtar Corporation (NYSE:UFS), American Assets Trust, Inc (NYSE:AAT), AeroVironment, Inc. (NASDAQ:AVAV), Cactus, Inc. (NYSE:WHD), and Delphi Technologies PLC (NYSE:DLPH). This group of stocks' market values resemble LZB's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ONTO,15,114223,-2 HCAT,14,130755,1 UFS,24,218760,-3 AAT,15,29076,-5 AVAV,16,49345,-1 WHD,20,103650,-2 DLPH,29,397481,2 Average,19,149041,-1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $149 million. That figure was $68 million in LZB's case. Delphi Technologies PLC (NYSE:DLPH) is the most popular stock in this table. On the other hand Health Catalyst, Inc (NASDAQ:HCAT) is the least popular one with only 14 bullish hedge fund positions. La-Z-Boy Incorporated (NYSE:LZB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LZB is 48. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on LZB as the stock returned 24.2% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.