Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Lawson Products, Inc. (NASDAQ:LAWS).
Lawson Products, Inc. (NASDAQ:LAWS) was in 5 hedge funds’ portfolios at the end of the second quarter of 2019. LAWS has experienced an increase in enthusiasm from smart money recently. There were 4 hedge funds in our database with LAWS holdings at the end of the previous quarter. Our calculations also showed that LAWS isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most stock holders, hedge funds are perceived as slow, outdated financial tools of years past. While there are over 8000 funds in operation at present, We choose to focus on the crème de la crème of this group, approximately 750 funds. These hedge fund managers command the lion’s share of the smart money’s total asset base, and by following their highest performing stock picks, Insider Monkey has brought to light various investment strategies that have historically outrun the market. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Let’s go over the new hedge fund action surrounding Lawson Products, Inc. (NASDAQ:LAWS).
Hedge fund activity in Lawson Products, Inc. (NASDAQ:LAWS)
Heading into the third quarter of 2019, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards LAWS over the last 16 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, GAMCO Investors was the largest shareholder of Lawson Products, Inc. (NASDAQ:LAWS), with a stake worth $6.7 million reported as of the end of March. Trailing GAMCO Investors was Renaissance Technologies, which amassed a stake valued at $3.2 million. Royce & Associates, Millennium Management, and Navellier & Associates were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, specific money managers were breaking ground themselves. Navellier & Associates, managed by Louis Navellier, initiated the most outsized position in Lawson Products, Inc. (NASDAQ:LAWS). Navellier & Associates had $0.2 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Lawson Products, Inc. (NASDAQ:LAWS) but similarly valued. These stocks are Avid Bioservices, Inc. (NASDAQ:CDMO), Teekay Corporation (NYSE:TK), Nathan’s Famous, Inc. (NASDAQ:NATH), and CECO Environmental Corp. (NASDAQ:CECE). This group of stocks’ market values resemble LAWS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CDMO | 7 | 32056 | -2 |
| TK | 13 | 19423 | 3 |
| NATH | 6 | 43132 | 0 |
| CECE | 12 | 54660 | -2 |
| Average | 9.5 | 37318 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $15 million in LAWS’s case. Teekay Corporation (NYSE:TK) is the most popular stock in this table. On the other hand Nathan’s Famous, Inc. (NASDAQ:NATH) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Lawson Products, Inc. (NASDAQ:LAWS) is even less popular than NATH. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 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 5.4% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
