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Did Hedge Funds Make The Right Call On Lincoln Electric Holdings, Inc. (LECO)?

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 thoughtLincoln Electric Holdings, Inc. (NASDAQ:LECO) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Lincoln Electric Holdings, Inc. (NASDAQ:LECO) was in 19 hedge funds’ portfolios at the end of the first quarter of 2020. LECO investors should be aware of an increase in hedge fund sentiment of late. There were 16 hedge funds in our database with LECO holdings at the end of the previous quarter. Our calculations also showed that LECO 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.

To most shareholders, hedge funds are viewed as unimportant, outdated investment tools of the past. While there are greater than 8000 funds in operation at present, Our researchers hone in on the moguls of this club, approximately 850 funds. These hedge fund managers control most of the hedge fund industry’s total capital, and by tracking their first-class equity investments, Insider Monkey has identified various investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

BRIDGEWATER ASSOCIATES

Ray Dalio of Bridgewater Associates

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar 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 we’re going to take a look at the latest hedge fund action encompassing Lincoln Electric Holdings, Inc. (NASDAQ:LECO).

Hedge fund activity in Lincoln Electric Holdings, Inc. (NASDAQ:LECO)

Heading into the second quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19% from the previous quarter. On the other hand, there were a total of 26 hedge funds with a bullish position in LECO a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is LECO A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the number one position in Lincoln Electric Holdings, Inc. (NASDAQ:LECO). Royce & Associates has a $59.1 million position in the stock, comprising 0.8% of its 13F portfolio. On Royce & Associates’s heels is Ken Fisher of Fisher Asset Management, with a $47.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers that are bullish encompass Israel Englander’s Millennium Management, Noam Gottesman’s GLG Partners and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Lincoln Electric Holdings, Inc. (NASDAQ:LECO), around 0.81% of its 13F portfolio. Skylands Capital is also relatively very bullish on the stock, setting aside 0.6 percent of its 13F equity portfolio to LECO.

As aggregate interest increased, specific money managers were leading the bulls’ herd. Paloma Partners, managed by Donald Sussman, initiated the most valuable position in Lincoln Electric Holdings, Inc. (NASDAQ:LECO). Paloma Partners had $1.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $1 million position during the quarter. The other funds with brand new LECO positions are Hoon Kim’s Quantinno Capital, D. E. Shaw’s D E Shaw, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Lincoln Electric Holdings, Inc. (NASDAQ:LECO) but similarly valued. We will take a look at China Biologic Products Holdings Inc (NASDAQ:CBPO), Gold Fields Limited (NYSE:GFI), Comerica Incorporated (NYSE:CMA), and Beyond Meat, Inc. (NASDAQ:BYND). This group of stocks’ market caps are similar to LECO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CBPO 16 612733 -3
GFI 22 244665 4
CMA 33 255146 -3
BYND 13 91343 -6
Average 21 300972 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $301 million. That figure was $158 million in LECO’s case. Comerica Incorporated (NYSE:CMA) is the most popular stock in this table. On the other hand Beyond Meat, Inc. (NASDAQ:BYND) is the least popular one with only 13 bullish hedge fund positions. Lincoln Electric Holdings, Inc. (NASDAQ:LECO) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on LECO as the stock returned 36.7% since the end of March and outperformed the market by an even larger margin.

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