In this article we are going to use hedge fund sentiment as a tool and determine whether Limbach Holdings, Inc. (NASDAQ:LMB) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Limbach Holdings, Inc. (NASDAQ:LMB) a buy, sell, or hold? Investors who are in the know were becoming more confident. The number of long hedge fund bets moved up by 3 lately. Limbach Holdings, Inc. (NASDAQ:LMB) was in 4 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 5. Our calculations also showed that LMB 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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 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. Keeping this in mind let’s view the key hedge fund action encompassing Limbach Holdings, Inc. (NASDAQ:LMB).
How are hedge funds trading Limbach Holdings, Inc. (NASDAQ:LMB)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 300% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards LMB over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Renaissance Technologies has the biggest position in Limbach Holdings, Inc. (NASDAQ:LMB), worth close to $1.8 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by Kamunting Street Capital, managed by Allan Teh, which holds a $0.4 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining peers that are bullish encompass Greg Eisner’s Engineers Gate Manager, Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital) and . In terms of the portfolio weights assigned to each position Kamunting Street Capital allocated the biggest weight to Limbach Holdings, Inc. (NASDAQ:LMB), around 0.26% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to LMB.
As industrywide interest jumped, key money managers were breaking ground themselves. Kamunting Street Capital, managed by Allan Teh, established the most outsized position in Limbach Holdings, Inc. (NASDAQ:LMB). Kamunting Street Capital had $0.4 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $0.2 million investment in the stock during the quarter. The only other fund with a new position in the stock is Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).
Let’s check out hedge fund activity in other stocks similar to Limbach Holdings, Inc. (NASDAQ:LMB). These stocks are Gulfport Energy Corporation (NASDAQ:GPOR), RigNet Inc (NASDAQ:RNET), Marlin Business Services Corp. (NASDAQ:MRLN), X Financial (NYSE:XYF), RYB Education, Inc. (NYSE:RYB), Braemar Hotels & Resorts Inc. (NYSE:BHR), and Zagg Inc (NASDAQ:ZAGG). This group of stocks’ market caps match LMB’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.3 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $2 million in LMB’s case. Braemar Hotels & Resorts Inc. (NYSE:BHR) is the most popular stock in this table. On the other hand X Financial (NYSE:XYF) is the least popular one with only 3 bullish hedge fund positions. Limbach Holdings, Inc. (NASDAQ:LMB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LMB is 36.5. 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 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 LMB as the stock returned 12% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.