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Did Hedge Funds Make The Right Call On Lantheus Holdings Inc (LNTH) ?

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional 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. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Lantheus Holdings Inc (NASDAQ:LNTH) and determine whether hedge funds skillfully traded this stock.

Is Lantheus Holdings Inc (NASDAQ:LNTH) a splendid investment today? The smart money was becoming more confident. The number of long hedge fund bets inched up by 4 lately. Our calculations also showed that LNTH 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). LNTH was in 20 hedge funds’ portfolios at the end of the first quarter of 2020. There were 16 hedge funds in our database with LNTH holdings at the end of the previous quarter.

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 58 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.

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind let’s review the recent hedge fund action regarding Lantheus Holdings Inc (NASDAQ:LNTH).

What does smart money think about Lantheus Holdings Inc (NASDAQ:LNTH)?

At Q1’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards LNTH over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Armistice Capital was the largest shareholder of Lantheus Holdings Inc (NASDAQ:LNTH), with a stake worth $16.9 million reported as of the end of September. Trailing Armistice Capital was Renaissance Technologies, which amassed a stake valued at $16 million. Cloverdale Capital Management, Arrowstreet Capital, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Cloverdale Capital Management allocated the biggest weight to Lantheus Holdings Inc (NASDAQ:LNTH), around 8.6% of its 13F portfolio. Armistice Capital is also relatively very bullish on the stock, setting aside 1.04 percent of its 13F equity portfolio to LNTH.

As industrywide interest jumped, key money managers have been driving this bullishness. Armistice Capital, managed by Steven Boyd, established the largest position in Lantheus Holdings Inc (NASDAQ:LNTH). Armistice Capital had $16.9 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $3.6 million position during the quarter. The other funds with brand new LNTH positions are Greg Eisner’s Engineers Gate Manager, Mika Toikka’s AlphaCrest Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s now take a look at hedge fund activity in other stocks similar to Lantheus Holdings Inc (NASDAQ:LNTH). We will take a look at Loral Space & Communications Inc (NASDAQ:LORL), Preferred Bank (NASDAQ:PFBC), LeMaitre Vascular Inc (NASDAQ:LMAT), and Camping World Holdings, Inc. (NYSE:CWH). This group of stocks’ market values are closest to LNTH’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LORL 19 223665 1
PFBC 7 24634 -4
LMAT 6 4580 -3
CWH 16 67549 1
Average 12 80107 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $80 million. That figure was $78 million in LNTH’s case. Loral Space & Communications Inc (NASDAQ:LORL) is the most popular stock in this table. On the other hand LeMaitre Vascular Inc (NASDAQ:LMAT) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Lantheus Holdings Inc (NASDAQ:LNTH) 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 gained 18.6% in 2020 through July 27th and still beat the market by 17.1 percentage points. Unfortunately LNTH wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on LNTH were disappointed as the stock returned 22.2% since the end of the first quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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