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Were Hedge Funds Right About The Liberty SiriusXM Group (LSXMA)?

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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about The Liberty SiriusXM Group (NASDAQ:LSXMA) in this article.

The Liberty SiriusXM Group (NASDAQ:LSXMA) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 42 hedge funds' portfolios at the end of December. Our calculations also showed that LSXMA isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Carnival Corporation & plc (NYSE:CUK), Logitech International SA (NASDAQ:LOGI), and Tractor Supply Company (NASDAQ:TSCO) to gather more data points.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Keith Meister of Corvex Capital

At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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 we're going to take a look at the latest hedge fund action encompassing The Liberty SiriusXM Group (NASDAQ:LSXMA).

Do Hedge Funds Think LSXMA Is A Good Stock To Buy Now?

At Q4's end, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in LSXMA over the last 22 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in The Liberty SiriusXM Group (NASDAQ:LSXMA) was held by Berkshire Hathaway, which reported holding $641.8 million worth of stock at the end of December. It was followed by D E Shaw with a $196.9 million position. Other investors bullish on the company included Baupost Group, Citadel Investment Group, and FPR Partners. In terms of the portfolio weights assigned to each position Raging Capital Management allocated the biggest weight to The Liberty SiriusXM Group (NASDAQ:LSXMA), around 21.19% of its 13F portfolio. Swift Run Capital Management is also relatively very bullish on the stock, dishing out 3.55 percent of its 13F equity portfolio to LSXMA.

Judging by the fact that The Liberty SiriusXM Group (NASDAQ:LSXMA) has faced a decline in interest from hedge fund managers, it's safe to say that there exists a select few fund managers who sold off their full holdings heading into Q1. Intriguingly, Mark Moore's ThornTree Capital Partners sold off the largest investment of the "upper crust" of funds followed by Insider Monkey, totaling close to $15.9 million in stock, and Steve Cohen's Point72 Asset Management was right behind this move, as the fund sold off about $10.7 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as The Liberty SiriusXM Group (NASDAQ:LSXMA) but similarly valued. These stocks are Carnival Corporation & plc (NYSE:CUK), Logitech International SA (NASDAQ:LOGI), Tractor Supply Company (NASDAQ:TSCO), Sun Communities Inc (NYSE:SUI), Solaredge Technologies Inc (NASDAQ:SEDG), M&T Bank Corporation (NYSE:MTB), and Nomura Holdings, Inc. (NYSE:NMR). This group of stocks' market valuations match LSXMA's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CUK,7,116507,-6 LOGI,21,432791,6 TSCO,39,1179291,-9 SUI,27,600763,-4 SEDG,28,458949,-3 MTB,33,382587,-2 NMR,6,17627,0 Average,23,455502,-2.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $456 million. That figure was $1692 million in LSXMA's case. Tractor Supply Company (NASDAQ:TSCO) is the most popular stock in this table. On the other hand Nomura Holdings, Inc. (NYSE:NMR) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks The Liberty SiriusXM Group (NASDAQ:LSXMA) is more popular among hedge funds. Our overall hedge fund sentiment score for LSXMA is 80.2. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Unfortunately LSXMA wasn't nearly as popular as these 10 stocks and hedge funds that were betting on LSXMA were disappointed as the stock returned 4.6% since the end of the fourth quarter (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.

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