Hedge Funds Are Buying Lantheus Holdings Inc (LNTH)

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Lantheus Holdings Inc (NASDAQ:LNTH) has seen an increase in support from the world’s most successful money managers in recent months. LNTH was in 12 hedge funds’ portfolios at the end of the third quarter of 2016. There were 4 hedge funds in our database with LNTH positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Celadon Group, Inc. (NYSE:CGI), Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC), and Landcadia Holdings Inc. (NASDAQ:LCAHU) to gather more data points.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

Keeping this in mind, we’re going to take a look at the fresh action surrounding Lantheus Holdings Inc (NASDAQ:LNTH).

Hedge fund activity in Lantheus Holdings Inc (NASDAQ:LNTH)

Heading into the fourth quarter of 2016, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a surge of 200% from the previous quarter. On the other hand, there were a total of 3 hedge funds with a bullish position in LNTH at the beginning of this year. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Don Morgan’s Brigade Capital has the biggest position in Lantheus Holdings Inc (NASDAQ:LNTH), worth close to $8 million, corresponding to 0.4% of its total 13F portfolio. The second largest stake is held by Paul Marshall and Ian Wace of Marshall Wace LLP, with a $2.8 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining peers that are bullish comprise Robert B. Gillam’s McKinley Capital Management, Renaissance Technologies, one of the largest hedge funds in the world and Mike Vranos’s Ellington. We should note that Brigade Capital is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Now, key money managers were breaking ground themselves. Marshall Wace LLP created the most valuable position in Lantheus Holdings Inc (NASDAQ:LNTH), followed by Robert B. Gillam’s McKinley Capital Management, which initiated a $2 million position during the quarter. The following funds were also among the new LNTH investors: Mike Vranos’s Ellington, Joseph Edelman’s Perceptive Advisors, and Joshua Packwood and Schuster Tanger’s Radix Partners.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Lantheus Holdings Inc (NASDAQ:LNTH) but similarly valued. These stocks are Celadon Group, Inc. (NYSE:CGI), Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC), Landcadia Holdings Inc. (NASDAQ:LCAHU), and Easterly Acquisition Corp (NASDAQ:EACQ). This group of stocks’ market values are similar to LNTH’s market value.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $16 million in LNTH’s case. Landcadia Holdings Inc. (NASDAQ:LCAHU) is the most popular stock in this table. On the other hand Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC) is the least popular one with only 6 bullish hedge fund positions. Lantheus Holdings Inc (NASDAQ:LNTH) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LCAHU might be a better candidate to consider taking a long position in.

Disclosure: none.