Were Hedge Funds Right About Liberty Broadband Corp (LBRDK)?
As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Liberty Broadband Corp (NASDAQ:LBRDK).
Liberty Broadband Corp (NASDAQ:LBRDK) investors should pay attention to a decrease in hedge fund sentiment lately. Liberty Broadband Corp (NASDAQ:LBRDK) was in 70 hedge funds' portfolios at the end of March. The all time high for this statistic is 80. There were 80 hedge funds in our database with LBRDK holdings at the end of December. Our calculations also showed that LBRDK isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Boykin Curry of Eagle Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. Now let's take a look at the latest hedge fund action surrounding Liberty Broadband Corp (NASDAQ:LBRDK).
Do Hedge Funds Think LBRDK Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 70 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the fourth quarter of 2020. By comparison, 45 hedge funds held shares or bullish call options in LBRDK a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Eagle Capital Management, managed by Boykin Curry, holds the number one position in Liberty Broadband Corp (NASDAQ:LBRDK). Eagle Capital Management has a $1.3846 billion position in the stock, comprising 4.3% of its 13F portfolio. Coming in second is George Soros of Soros Fund Management, with a $631.1 million position; the fund has 11.8% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish contain Robert Henry Lynch's Aristeia Capital, Bob Peck and Andy Raab's FPR Partners and Sharlyn C. Heslam's Stockbridge Partners. In terms of the portfolio weights assigned to each position Makaira Partners allocated the biggest weight to Liberty Broadband Corp (NASDAQ:LBRDK), around 29.17% of its 13F portfolio. Cat Rock Capital is also relatively very bullish on the stock, earmarking 29.02 percent of its 13F equity portfolio to LBRDK.
Judging by the fact that Liberty Broadband Corp (NASDAQ:LBRDK) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of funds who were dropping their positions entirely heading into Q2. Interestingly, Andrew Immerman and Jeremy Schiffman's Palestra Capital Management dumped the largest stake of the 750 funds watched by Insider Monkey, totaling close to $162.9 million in stock. Gaurav Kapadia's fund, XN Exponent Advisors, also sold off its stock, about $67.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 10 funds heading into Q2.
Let's check out hedge fund activity in other stocks similar to Liberty Broadband Corp (NASDAQ:LBRDK). We will take a look at Discover Financial Services (NYSE:DFS), First Republic Bank (NYSE:FRC), ViacomCBS Inc. (NASDAQ:VIAC), Okta, Inc. (NASDAQ:OKTA), Fastenal Company (NASDAQ:FAST), Williams Companies, Inc. (NYSE:WMB), and Verisk Analytics, Inc. (NASDAQ:VRSK). This group of stocks' market values match LBRDK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DFS,45,654294,2 FRC,41,1262066,7 VIAC,89,2349597,45 OKTA,48,1616565,-13 FAST,24,576286,-6 WMB,34,475466,-4 VRSK,34,1584703,2 Average,45,1216997,4.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 45 hedge funds with bullish positions and the average amount invested in these stocks was $1217 million. That figure was $6857 million in LBRDK's case. ViacomCBS Inc. (NASDAQ:VIAC) is the most popular stock in this table. On the other hand Fastenal Company (NASDAQ:FAST) is the least popular one with only 24 bullish hedge fund positions. Liberty Broadband Corp (NASDAQ:LBRDK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LBRDK is 56.6. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.8% in 2021 through August 6th and still beat the market by 6.7 percentage points. Hedge funds were also right about betting on LBRDK as the stock returned 21.6% since the end of Q1 (through 8/6) 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.
