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Did Hedge Funds Make The Right Call On Liberty Broadband Corp (LBRDA) ?

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 thoughtLiberty Broadband Corp (NASDAQ:LBRDA) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Is Liberty Broadband Corp (NASDAQ:LBRDA) worth your attention right now? Money managers were taking an optimistic view. The number of long hedge fund positions increased by 2 in recent months. Our calculations also showed that LBRDA 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Boykin Curry EAGLE CAPITAL MANAGEMENT

Boykin Curry of Eagle Capital

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. With all of this in mind we’re going to check out the recent hedge fund action surrounding Liberty Broadband Corp (NASDAQ:LBRDA).

How have hedgies been trading Liberty Broadband Corp (NASDAQ:LBRDA)?

At the end of the first quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in LBRDA over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, FPR Partners was the largest shareholder of Liberty Broadband Corp (NASDAQ:LBRDA), with a stake worth $124.6 million reported as of the end of September. Trailing FPR Partners was Ashe Capital, which amassed a stake valued at $110 million. Eagle Capital Management, Hudson Bay Capital Management, and D E Shaw 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 Act II Capital allocated the biggest weight to Liberty Broadband Corp (NASDAQ:LBRDA), around 14.66% of its 13F portfolio. Ashe Capital is also relatively very bullish on the stock, earmarking 10.18 percent of its 13F equity portfolio to LBRDA.

As one would reasonably expect, key money managers were breaking ground themselves. Stony Point Capital, managed by Richard Walters II, assembled the largest position in Liberty Broadband Corp (NASDAQ:LBRDA). Stony Point Capital had $5.2 million invested in the company at the end of the quarter. Morris Mark’s Mark Asset Management also initiated a $4.3 million position during the quarter. The following funds were also among the new LBRDA investors: Ken Griffin’s Citadel Investment Group, Steve Pigott’s Fort Baker Capital Management, and Brett Huckelbridge’s Steel Canyon Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Liberty Broadband Corp (NASDAQ:LBRDA) but similarly valued. We will take a look at Nutrien Ltd. (NYSE:NTR), Xilinx, Inc. (NASDAQ:XLNX), Synopsys, Inc. (NASDAQ:SNPS), and Twitter Inc (NYSE:TWTR). This group of stocks’ market values are similar to LBRDA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NTR 22 269579 -6
XLNX 38 635591 -4
SNPS 31 725655 -14
TWTR 55 990334 0
Average 36.5 655290 -6

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.5 hedge funds with bullish positions and the average amount invested in these stocks was $655 million. That figure was $656 million in LBRDA’s case. Twitter Inc (NYSE:TWTR) is the most popular stock in this table. On the other hand Nutrien Ltd. (NYSE:NTR) is the least popular one with only 22 bullish hedge fund positions. Liberty Broadband Corp (NASDAQ:LBRDA) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately LBRDA wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); LBRDA investors were disappointed as the stock returned 14.2% during the second 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.