Do Hedge Funds Love Lawson Products, Inc. (LAWS)?

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Lawson Products, Inc. (NASDAQ:LAWS).

Lawson Products, Inc. (NASDAQ:LAWS) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds’ portfolios at the end of March. Our calculations also showed that LAWS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare LAWS to other stocks including Cross Country Healthcare, Inc. (NASDAQ:CCRN), Noodles & Co (NASDAQ:NDLS), and Teekay Tankers Ltd. (NYSE:TNK) to get a better sense of its popularity.

According to most shareholders, hedge funds are perceived as worthless, outdated financial tools of years past. While there are greater than 8000 funds trading at present, Our researchers hone in on the top tier of this group, about 850 funds. These money managers control the lion’s share of the smart money’s total asset base, and by tailing their finest picks, Insider Monkey has determined numerous investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a peek at the key hedge fund action encompassing Lawson Products, Inc. (NASDAQ:LAWS).

Do Hedge Funds Think LAWS Is A Good Stock To Buy Now?

At Q1’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LAWS over the last 23 quarters. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

The largest stake in Lawson Products, Inc. (NASDAQ:LAWS) was held by Royce & Associates, which reported holding $19.2 million worth of stock at the end of December. It was followed by GAMCO Investors with a $7.3 million position. Other investors bullish on the company included Renaissance Technologies, Bailard Inc, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Lawson Products, Inc. (NASDAQ:LAWS), around 0.13% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, designating 0.06 percent of its 13F equity portfolio to LAWS.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Winton Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Bailard Inc).

Let’s now review hedge fund activity in other stocks similar to Lawson Products, Inc. (NASDAQ:LAWS). These stocks are Cross Country Healthcare, Inc. (NASDAQ:CCRN), Noodles & Co (NASDAQ:NDLS), Teekay Tankers Ltd. (NYSE:TNK), Viking Therapeutics, Inc. (NASDAQ:VKTX), HBT Financial, Inc. (NASDAQ:HBT), Priority Technology Holdings, Inc. (NASDAQ:PRTH), and Jounce Therapeutics, Inc. (NASDAQ:JNCE). This group of stocks’ market caps are closest to LAWS’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.4 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $31 million in LAWS’s case. Noodles & Co (NASDAQ:NDLS) is the most popular stock in this table. On the other hand Priority Technology Holdings, Inc. (NASDAQ:PRTH) is the least popular one with only 1 bullish hedge fund positions. Lawson Products, Inc. (NASDAQ:LAWS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LAWS is 35.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and beat the market by 6.1 percentage points. A small number of hedge funds were also right about betting on LAWS, though not to the same extent, as the stock returned 5.8% since the end of Q1 (through June 18th) and outperformed the market.

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