Is LKQ Corporation (LKQ) Right For Your Portfolio?

There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze LKQ Corporation (NASDAQ:LKQ).

Is LKQ Corporation (NASDAQ:LKQ) a safe investment today? Money managers are becoming hopeful. The number of long hedge fund bets moved up by 2 in recent months. At the end of this article we will also compare LKQ to other stocks including Discovery Communications Inc. (NASDAQ:DISCK), Celanese Corporation (NYSE:CE), and Hologic, Inc. (NASDAQ:HOLX) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Now, we’re going to take a look at the fresh action surrounding LKQ Corporation (NASDAQ:LKQ).

How are hedge funds trading LKQ Corporation (NASDAQ:LKQ)?

At Q3’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a gain of 7% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Charles Akre’s Akre Capital Management has the largest position in LKQ Corporation (NASDAQ:LKQ), worth close to $125.9 million, amounting to 2.4% of its total 13F portfolio. Coming in second is Pennant Capital Management, led by Alan Fournier, holding a $89 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions encompass Jeff Lignelli’s Incline Global Management, Francois Rochon’s Giverny Capital and Ian Simm’s Impax Asset Management.

Now, some big names have jumped into LKQ Corporation (NASDAQ:LKQ) headfirst. Renaissance Technologies, managed by Jim Simons, created the most outsized position in LKQ Corporation (NASDAQ:LKQ). Renaissance Technologies had $6.3 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $3.9 million position during the quarter. The following funds were also among the new LKQ investors: Andrew Goldman’s Seven Locks Capital Management, Ken Griffin’s Citadel Investment Group, and Alec Litowitz and Ross Laser’s Magnetar Capital.

Let’s go over hedge fund activity in other stocks similar to LKQ Corporation (NASDAQ:LKQ). These stocks are Discovery Communications Inc. (NASDAQ:DISCK), Celanese Corporation (NYSE:CE), Hologic, Inc. (NASDAQ:HOLX), and Philippine Long Distance Telephone (ADR) (NYSE:PHI). All of these stocks’ market caps are closest to LKQ’s market cap.

As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $500 million. That figure was $669 million in LKQ’s case. Hologic, Inc. (NASDAQ:HOLX) is the most popular stock in this table. On the other hand Philippine Long Distance Telephone (ADR) (NYSE:PHI) is the least popular one with only 4 bullish hedge fund positions. LKQ Corporation (NASDAQ:LKQ) is not the most popular stock in this group but hedge fund interest is still above average and rising. This is a slightly positive signal, which makes it a decent candidate to consider taking a long position in.

Disclosure: None