Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors' money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Is Laureate Education, Inc. (NASDAQ:LAUR) the right pick for your portfolio? Investors who are in the know are in a bullish mood. The number of long hedge fund bets improved by 2 recently. Our calculations also showed that LAUR isn't among the 30 most popular stocks among hedge funds (see the video below). LAUR was in 23 hedge funds' portfolios at the end of the second quarter of 2019. There were 21 hedge funds in our database with LAUR holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most traders, hedge funds are assumed to be underperforming, outdated financial tools of the past. While there are greater than 8000 funds with their doors open today, Our experts choose to focus on the aristocrats of this group, around 750 funds. These investment experts orchestrate the lion's share of the hedge fund industry's total capital, and by observing their matchless equity investments, Insider Monkey has revealed many investment strategies that have historically outrun the market. Insider Monkey's flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points per year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to review the fresh hedge fund action encompassing Laureate Education, Inc. (NASDAQ:LAUR).
What does smart money think about Laureate Education, Inc. (NASDAQ:LAUR)?
At the end of the second quarter, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in LAUR 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.
The largest stake in Laureate Education, Inc. (NASDAQ:LAUR) was held by Melvin Capital Management, which reported holding $115.5 million worth of stock at the end of March. It was followed by 12 West Capital Management with a $57.7 million position. Other investors bullish on the company included Fir Tree, Alyeska Investment Group, and Select Equity Group.
As aggregate interest increased, key hedge funds were breaking ground themselves. SG Capital Management, managed by Ken Grossman and Glen Schneider, established the most outsized position in Laureate Education, Inc. (NASDAQ:LAUR). SG Capital Management had $19.3 million invested in the company at the end of the quarter. Jonathan Barrett and Paul Segal's Luminus Management also initiated a $8.5 million position during the quarter. The following funds were also among the new LAUR investors: Paul Marshall and Ian Wace's Marshall Wace LLP, Minhua Zhang's Weld Capital Management, and Matthew Hulsizer's PEAK6 Capital Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Laureate Education, Inc. (NASDAQ:LAUR) but similarly valued. These stocks are KBR, Inc. (NYSE:KBR), Weingarten Realty Investors (NYSE:WRI), PagerDuty, Inc. (NYSE:PD), and Apple Hospitality REIT Inc (NYSE:APLE). This group of stocks' market values resemble LAUR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KBR,22,600423,2 WRI,20,102837,7 PD,22,68266,22 APLE,14,89183,1 Average,19.5,215177,8 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $215 million. That figure was $427 million in LAUR's case. KBR, Inc. (NYSE:KBR) is the most popular stock in this table. On the other hand Apple Hospitality REIT Inc (NYSE:APLE) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Laureate Education, Inc. (NASDAQ:LAUR) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on LAUR, though not to the same extent, as the stock returned 5.5% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.