In this article we will take a look at whether hedge funds think Louisiana-Pacific Corporation (NYSE:LPX) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Louisiana-Pacific Corporation (NYSE:LPX) investors should be aware of an increase in hedge fund interest in recent months. Louisiana-Pacific Corporation (NYSE:LPX) was in 38 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 35. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that LPX isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Phillip Gross of Adage 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 most profitable companies in the world 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 to get excerpts of these letters in your inbox. Now we're going to take a glance at the latest hedge fund action regarding Louisiana-Pacific Corporation (NYSE:LPX).
How have hedgies been trading Louisiana-Pacific Corporation (NYSE:LPX)?
At Q2's end, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 46% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LPX over the last 20 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the most valuable position in Louisiana-Pacific Corporation (NYSE:LPX). Adage Capital Management has a $65.2 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Impala Asset Management, managed by Robert Bishop, which holds a $60.5 million position; the fund has 6.9% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism encompass Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position Impala Asset Management allocated the biggest weight to Louisiana-Pacific Corporation (NYSE:LPX), around 6.92% of its 13F portfolio. Jade Capital Advisors is also relatively very bullish on the stock, designating 3.84 percent of its 13F equity portfolio to LPX.
Now, key money managers were leading the bulls' herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the most outsized position in Louisiana-Pacific Corporation (NYSE:LPX). Arrowstreet Capital had $32.6 million invested in the company at the end of the quarter. Alexander Mitchell's Scopus Asset Management also initiated a $24.4 million position during the quarter. The other funds with new positions in the stock are Kerr Neilson's Platinum Asset Management, Louis Bacon's Moore Global Investments, and Matthew Hulsizer's PEAK6 Capital Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Louisiana-Pacific Corporation (NYSE:LPX) but similarly valued. We will take a look at HMS Holdings Corp. (NASDAQ:HMSY), Meritage Homes Corp (NYSE:MTH), CarGurus, Inc. (NASDAQ:CARG), The Howard Hughes Corporation (NYSE:HHC), NuVasive, Inc. (NASDAQ:NUVA), Shift4 Payments, Inc. (NYSE:FOUR), and Univar Solutions Inc (NYSE:UNVR). All of these stocks' market caps are closest to LPX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HMSY,16,110794,-4 MTH,28,345923,6 CARG,31,411397,5 HHC,28,765597,4 NUVA,33,484596,9 FOUR,15,72444,15 UNVR,31,920084,-1 Average,26,444405,4.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $444 million. That figure was $418 million in LPX's case. NuVasive, Inc. (NASDAQ:NUVA) is the most popular stock in this table. On the other hand Shift4 Payments, Inc. (NYSE:FOUR) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Louisiana-Pacific Corporation (NYSE:LPX) is more popular among hedge funds. Our overall hedge fund sentiment score for LPX is 90. 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 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 23% in 2020 through October 30th but still managed to beat the market by 20.1 percentage points. Hedge funds were also right about betting on LPX as the stock returned 11.9% since the end of June (through 10/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Get real-time email alerts: Follow Louisiana-Pacific Corp (NYSE:LPX)
Disclosure: None. This article was originally published at Insider Monkey.