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We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Melvin Capital's recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards U.S. Lime & Minerals Inc. (NASDAQ:USLM).
Is USLM a good stock to buy? U.S. Lime & Minerals Inc. (NASDAQ:USLM) investors should pay attention to a decrease in hedge fund interest in recent months. U.S. Lime & Minerals Inc. (NASDAQ:USLM) was in 4 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 7. There were 5 hedge funds in our database with USLM holdings at the end of December. Our calculations also showed that USLM isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Chuck Royce of Royce & Associates
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to review the key hedge fund action regarding U.S. Lime & Minerals Inc. (NASDAQ:USLM).
Do Hedge Funds Think USLM Is A Good Stock To Buy Now?
At Q1's end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards USLM over the last 23 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the most valuable position in U.S. Lime & Minerals Inc. (NASDAQ:USLM). Renaissance Technologies has a $27.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Royce & Associates, led by Chuck Royce, holding a $14.2 million position; 0.1% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions encompass David P. Cohen's Minerva Advisors, Ken Griffin's Citadel Investment Group and . In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to U.S. Lime & Minerals Inc. (NASDAQ:USLM), around 2.86% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.1 percent of its 13F equity portfolio to USLM.
Due to the fact that U.S. Lime & Minerals Inc. (NASDAQ:USLM) has witnessed bearish sentiment from the entirety of the hedge funds we track, it's easy to see that there was a specific group of fund managers that decided to sell off their entire stakes last quarter. At the top of the heap, Roger Ibbotson's Zebra Capital Management dumped the largest position of all the hedgies tracked by Insider Monkey, totaling an estimated $0.3 million in stock. Jeffrey Bronchick's fund, Cove Street Capital, also said goodbye to its stock, about $0 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds last quarter.
Let's now review hedge fund activity in other stocks similar to U.S. Lime & Minerals Inc. (NASDAQ:USLM). These stocks are Asensus Surgical, Inc. (NYSE:ASXC), Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA), Central Pacific Financial Corp. (NYSE:CPF), Aspira Women's Health Inc. (NASDAQ:AWH), AdvanSix Inc. (NYSE:ASIX), Sportsman's Warehouse Holdings Inc (NASDAQ:SPWH), and SLR Investment Corp. (NASDAQ:SLRC). This group of stocks' market caps resemble USLM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ASXC,8,27618,5 LOMA,6,50928,-4 CPF,13,50673,-2 AWH,8,20897,2 ASIX,18,70328,5 SPWH,18,212159,-7 SLRC,9,20926,-3 Average,11.4,64790,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.4 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $48 million in USLM's case. AdvanSix Inc. (NYSE:ASIX) is the most popular stock in this table. On the other hand Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks U.S. Lime & Minerals Inc. (NASDAQ:USLM) is even less popular than LOMA. Our overall hedge fund sentiment score for USLM is 21.1. 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. Hedge funds dodged a bullet by taking a bearish stance towards USLM. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th but managed to beat the market again by 3.3 percentage points. Unfortunately USLM wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); USLM investors were disappointed as the stock returned 6.2% since the end of the first quarter (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.