Do Hedge Funds Love U.S. Lime & Minerals Inc. (USLM)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of U.S. Lime & Minerals Inc. (NASDAQ:USLM).

Is U.S. Lime & Minerals Inc. (NASDAQ:USLM) a worthy investment today? The best stock pickers were in an optimistic mood. The number of bullish hedge fund positions advanced by 1 in recent months. U.S. Lime & Minerals Inc. (NASDAQ:USLM) was in 5 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 7. Our calculations also showed that USLM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 4 hedge funds in our database with USLM holdings at the end of June.

Video: Watch our video about the top 5 most popular hedge fund stocks.

To most stock holders, hedge funds are viewed as underperforming, outdated investment vehicles of the past. While there are more than 8000 funds trading at the moment, Our researchers hone in on the upper echelon of this club, around 850 funds. It is estimated that this group of investors command the lion’s share of the hedge fund industry’s total asset base, and by tracking their first-class stock picks, Insider Monkey has discovered a few investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Jeffrey Bronchick - Cove Street Capital

Jeffrey Bronchick of Cove Street Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to take a gander at the new hedge fund action encompassing U.S. Lime & Minerals Inc. (NASDAQ:USLM).

What have hedge funds been doing with U.S. Lime & Minerals Inc. (NASDAQ:USLM)?

At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 3 hedge funds with a bullish position in USLM a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

The largest stake in U.S. Lime & Minerals Inc. (NASDAQ:USLM) was held by Renaissance Technologies, which reported holding $19.7 million worth of stock at the end of September. It was followed by Minerva Advisors with a $11.7 million position. Other investors bullish on the company included Royce & Associates, Zebra Capital Management, and Cove Street Capital. In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to U.S. Lime & Minerals Inc. (NASDAQ:USLM), around 7.89% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, designating 0.34 percent of its 13F equity portfolio to USLM.

Consequently, key money managers have been driving this bullishness. Zebra Capital Management, managed by Roger Ibbotson, assembled the biggest position in U.S. Lime & Minerals Inc. (NASDAQ:USLM). Zebra Capital Management had $0.2 million invested in the company at the end of the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as U.S. Lime & Minerals Inc. (NASDAQ:USLM) but similarly valued. We will take a look at TORM plc (NASDAQ:TRMD), Community Health Systems, Inc. (NYSE:CYH), IVERIC bio, Inc. (NASDAQ:ISEE), Brigham Minerals, Inc. (NYSE:MNRL), TrustCo Bank Corp NY (NASDAQ:TRST), Atreca, Inc. (NASDAQ:BCEL), and Community Trust Bancorp, Inc. (NASDAQ:CTBI). This group of stocks’ market caps are similar to USLM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TRMD 3 362385 0
CYH 22 194242 4
ISEE 26 278032 -5
MNRL 19 75169 3
TRST 14 16105 1
BCEL 12 162774 3
CTBI 10 15317 2
Average 15.1 157718 1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $158 million. That figure was $39 million in USLM’s case. IVERIC bio, Inc. (NASDAQ:ISEE) is the most popular stock in this table. On the other hand TORM plc (NASDAQ:TRMD) is the least popular one with only 3 bullish hedge fund positions. U.S. Lime & Minerals Inc. (NASDAQ:USLM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for USLM is 31.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on USLM as the stock returned 22.7% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.

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