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Where Do Hedge Funds Stand On Livent Corporation (LTHM)?

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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 Livent Corporation (NYSE:LTHM).

Hedge fund interest in Livent Corporation (NYSE:LTHM) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that LTHM isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare LTHM to other stocks including Ormat Technologies, Inc. (NYSE:ORA), Sunoco LP (NYSE:SUN), and Ryan Specialty Group Holdings Inc. (NYSE:RYAN) to get a better sense of its popularity.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we're going to take a glance at the new hedge fund action regarding Livent Corporation (NYSE:LTHM).

Richard Driehaus of Driehaus Capital

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

At the end of September, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in LTHM a year ago. 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, Joho Capital, managed by Robert Karr, holds the largest position in Livent Corporation (NYSE:LTHM). Joho Capital has a $98.8 million position in the stock, comprising 13.3% of its 13F portfolio. On Joho Capital's heels is Renaissance Technologies, holding a $42.3 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism comprise Israel Englander's Millennium Management, Richard Driehaus's Driehaus Capital and Chuck Royce's Royce & Associates. In terms of the portfolio weights assigned to each position Joho Capital allocated the biggest weight to Livent Corporation (NYSE:LTHM), around 13.28% of its 13F portfolio. Axel Capital Management is also relatively very bullish on the stock, setting aside 5.84 percent of its 13F equity portfolio to LTHM.

Since Livent Corporation (NYSE:LTHM) has witnessed declining sentiment from the entirety of the hedge funds we track, we can see that there is a sect of fund managers who sold off their entire stakes last quarter. Intriguingly, D. E. Shaw's D E Shaw cut the largest stake of all the hedgies followed by Insider Monkey, worth an estimated $11.6 million in stock, and Matthew L Pinz's Pinz Capital was right behind this move, as the fund dumped about $9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Livent Corporation (NYSE:LTHM) but similarly valued. We will take a look at Ormat Technologies, Inc. (NYSE:ORA), Sunoco LP (NYSE:SUN), Ryan Specialty Group Holdings Inc. (NYSE:RYAN), KnowBe4 Inc. (NASDAQ:KNBE), Genius Sports Ltd (NYSE:GENI), F.N.B. Corp (NYSE:FNB), and Grupo Simec S.A.B. de C.V. (NYSE:SIM). All of these stocks' market caps are similar to LTHM's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ORA,13,233291,-8 SUN,2,2788,-1 RYAN,18,379783,18 KNBE,18,469506,9 GENI,31,400592,-8 FNB,19,112773,3 SIM,1,5895,0 Average,14.6,229233,1.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.6 hedge funds with bullish positions and the average amount invested in these stocks was $229 million. That figure was $277 million in LTHM's case. Genius Sports Ltd (NYSE:GENI) is the most popular stock in this table. On the other hand Grupo Simec S.A.B. de C.V. (NYSE:SIM) is the least popular one with only 1 bullish hedge fund positions. Livent Corporation (NYSE:LTHM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LTHM is 78.3. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Hedge funds were also right about betting on LTHM as the stock returned 15.7% since the end of Q3 (through 12/9) 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.