How do we determine whether Lions Gate Entertainment Corp. (USA) (NYSE:LGF) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Lions Gate Entertainment Corp. (USA) (NYSE:LGF) investors should be aware of a decrease in hedge fund sentiment recently. 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 Lazard Ltd (NYSE:LAZ), OGE Energy Corp. (NYSE:OGE), and 58.com Inc (ADR) (NYSE:WUBA) to gather more data points.
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In the eyes of most traders, hedge funds are seen as unimportant, old investment tools of years past. While there are greater than an 8000 funds in operation at the moment, We hone in on the elite of this group, around 700 funds. These investment experts have their hands on most of all hedge funds’ total capital, and by keeping track of their inimitable picks, Insider Monkey has deciphered various investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per year for a decade in their back tests.
With all of this in mind, we’re going to go over the recent action surrounding Lions Gate Entertainment Corp. (USA) (NYSE:LGF).
What have hedge funds been doing with Lions Gate Entertainment Corp. (USA) (NYSE:LGF)?
At the end of the third quarter, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 6% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, MHR Fund Management, managed by Mark Rachesky, holds the largest position in Lions Gate Entertainment Corp. (USA) (NYSE:LGF). The fund reportedly holds a $1.48 billion stake in the company, comprising 69.4% of its 13F portfolio. Coming in second is JANA Partners, managed by Barry Rosenstein, which holds a $264.3 million position; 3% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions contain David Goel and Paul Ferri’s Matrix Capital Management, Masroor Siddiqui and Bruce Emery’s Naya Capital and Ken Griffin’s Citadel Investment Group.
Since Lions Gate Entertainment Corp. (USA) (NYSE:LGF) has experienced a declination in interest from the smart money, it’s safe to say that there is a sect of hedge funds that slashed their positions entirely in the third quarter. Intriguingly, Daniel Benton’s Andor Capital Management said goodbye to the largest stake of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $46.3 million in stock. Jim Simons’s fund, Renaissance Technologies, also cut its investment in the company, about $28.8 million worth of shares. These moves are important to note, as total hedge fund interest fell by 2 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Lions Gate Entertainment Corp. (USA) (NYSE:LGF) but similarly valued. These stocks are Lazard Ltd (NYSE:LAZ), OGE Energy Corp. (NYSE:OGE), 58.com Inc (ADR) (NYSE:WUBA), and Spectrum Brands Holdings, Inc. (NYSE:SPB). This group of stocks’ market caps are similar to LGF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LAZ | 22 | 562400 | -1 |
| OGE | 22 | 233394 | 7 |
| WUBA | 28 | 502045 | 4 |
| SPB | 25 | 546965 | -4 |
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $461 million. That figure was $2.52 billion in LGF’s case. 58.com Inc (ADR) (NYSE:WUBA) is the most popular stock in this table. On the other hand Lazard Ltd (NYSE:LAZ) and OGE Energy Corp. (NYSE:OGE) are the least popular ones with only 22 bullish hedge fund positions. With 33 long positions, Lions Gate Entertainment Corp. (USA) (NYSE:LGF) is clearly the star of this group. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
