Hedge Funds Are Selling Lamar Advertising Co (LAMR)

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Lamar Advertising Co (NASDAQ:LAMR)? The smart money sentiment can provide an answer to this question.

Is Lamar Advertising Co (NASDAQ:LAMR) a splendid investment right now? Hedge funds are taking a pessimistic view. The number of bullish hedge fund positions shrunk by 5 recently. LAMR was in 26 hedge funds’ portfolios at the end of September. There were 31 hedge funds in our database with LAMR holdings at the end of the previous quarter. At the end of this article we will also compare LAMR to other stocks including A. O. Smith Corporation (NYSE:AOS), Apartment Investment and Management Co. (NYSE:AIV), and Crescent Point Energy Corp (NYSE:CPG) to get a better sense of its popularity.

At the moment there are many signals market participants put to use to evaluate stocks. A pair of the less known signals are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top investment managers can trounce the S&P 500 by a very impressive amount (see the details here).

Keeping this in mind, we’re going to analyze the key action surrounding Lamar Advertising Co (NASDAQ:LAMR).

Hedge fund activity in Lamar Advertising Co (NASDAQ:LAMR)

At Q3’s end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decrease of 16% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jeffrey Tannenbaum’s Fir Tree has the largest position in Lamar Advertising Co (NASDAQ:LAMR), worth close to $145.1 million, comprising 2.4% of its total 13F portfolio. On Fir Tree’s heels is Richard S. Pzena of Pzena Investment Management, with a $132.8 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish comprise John Brennan’s Sirios Capital Management, Gilchrist Berg’s Water Street Capital and John Overdeck and David Siegel’s Two Sigma Advisors.

Because Lamar Advertising Co (NASDAQ:LAMR) has experienced falling interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedgies that elected to cut their full holdings by the end of the third quarter. At the top of the heap, Keith Meister’s Corvex Capital said goodbye to the biggest position of the 700 funds tracked by Insider Monkey, valued at about $9.5 million in stock, and Geoffrey Raynor’s Q Investments (Specter Holdings) was right behind this move, as the fund dumped about $4.2 million worth of shares. These transactions are important to note, as aggregate hedge fund interest fell by 5 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Lamar Advertising Co (NASDAQ:LAMR) but similarly valued. We will take a look at A. O. Smith Corporation (NYSE:AOS), Apartment Investment and Management Co. (NYSE:AIV), Crescent Point Energy Corp (NYSE:CPG), and Avnet, Inc. (NYSE:AVT). This group of stocks’ market caps resemble LAMR’s market cap.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $356 million. That figure was $464 million in LAMR’s case. Avnet, Inc. (NYSE:AVT) and A. O. Smith Corporation (NYSE:AOS) are leading the pack, while Crescent Point Energy Corp (NYSE:CPG) and Apartment Investment and Management Co. (NYSE:AIV) have only managed to attract the attention of 17 hedge funds each. Lamar Advertising Co (NASDAQ:LAMR) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AOS and AVT might be better candidates to consider for a long position.