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Did Hedge Funds Make The Right Call On Lamar Advertising Company (REIT) (LAMR) ?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thought Lamar Advertising Company (REIT) (NASDAQ:LAMR) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Lamar Advertising Company (REIT) (NASDAQ:LAMR) investors should pay attention to an increase in enthusiasm from smart money of late. LAMR was in 34 hedge funds’ portfolios at the end of March. There were 28 hedge funds in our database with LAMR positions at the end of the previous quarter. Our calculations also showed that LAMR isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 today’s marketplace there are a large number of tools market participants put to use to assess stocks. A pair of the less utilized tools are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top fund managers can trounce their index-focused peers by a healthy margin (see the details here).

Blair Levinsky of Waratah Capital Advisors

Blair Levinsky of Waratah Capital Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the recent hedge fund action encompassing Lamar Advertising Company (REIT) (NASDAQ:LAMR).

How are hedge funds trading Lamar Advertising Company (REIT) (NASDAQ:LAMR)?

Heading into the second quarter of 2020, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in LAMR over the last 18 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

The largest stake in Lamar Advertising Company (REIT) (NASDAQ:LAMR) was held by Renaissance Technologies, which reported holding $86.1 million worth of stock at the end of September. It was followed by Waratah Capital Advisors with a $22.6 million position. Other investors bullish on the company included LFL Advisers, Select Equity Group, and Echo Street Capital Management. In terms of the portfolio weights assigned to each position LFL Advisers allocated the biggest weight to Lamar Advertising Company (REIT) (NASDAQ:LAMR), around 9.35% of its 13F portfolio. Gratia Capital is also relatively very bullish on the stock, setting aside 6.78 percent of its 13F equity portfolio to LAMR.

As aggregate interest increased, key money managers have been driving this bullishness. Select Equity Group, managed by Robert Joseph Caruso, created the biggest position in Lamar Advertising Company (REIT) (NASDAQ:LAMR). Select Equity Group had $13.8 million invested in the company at the end of the quarter. Brian J. Higgins’s King Street Capital also made a $9.7 million investment in the stock during the quarter. The other funds with brand new LAMR positions are David Brown’s Hawk Ridge Management, Phill Gross and Robert Atchinson’s Adage Capital Management, and Steve Cohen’s Point72 Asset Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Lamar Advertising Company (REIT) (NASDAQ:LAMR) but similarly valued. These stocks are ON Semiconductor Corporation (NASDAQ:ON), Aegon N.V. (NYSE:AEG), United Microelectronics Corp (NYSE:UMC), and The New York Times Company (NYSE:NYT). This group of stocks’ market caps match LAMR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ON 29 153091 -3
AEG 4 16681 -2
UMC 15 98878 1
NYT 33 1414913 -2
Average 20.25 420891 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $421 million. That figure was $217 million in LAMR’s case. The New York Times Company (NYSE:NYT) is the most popular stock in this table. On the other hand Aegon N.V. (NYSE:AEG) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Lamar Advertising Company (REIT) (NASDAQ:LAMR) is more popular among hedge funds. 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 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on LAMR as the stock returned 31.1% in Q2 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.

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Disclosure: None. This article was originally published at Insider Monkey.