Hedge Funds Are Warming Up To Leggett & Platt, Inc. (LEG)

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Leggett & Platt, Inc. (NYSE:LEG).

Leggett & Platt, Inc. (NYSE:LEG) shareholders have witnessed an increase in activity from the world’s largest hedge funds recently. Leggett & Platt, Inc. (NYSE:LEG) was in 24 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 29. There were 20 hedge funds in our database with LEG holdings at the end of December. Our calculations also showed that LEG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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Ray Dalio of Bridgewater Associates

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s take a gander at the key hedge fund action surrounding Leggett & Platt, Inc. (NYSE:LEG).

Do Hedge Funds Think LEG Is A Good Stock To Buy Now?

At first quarter’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in LEG over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Arrowstreet Capital held the most valuable stake in Leggett & Platt, Inc. (NYSE:LEG), which was worth $21.7 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $19.5 million worth of shares. Royce & Associates, Holocene Advisors, and Bridgewater Associates were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Weld Capital Management allocated the biggest weight to Leggett & Platt, Inc. (NYSE:LEG), around 0.14% of its 13F portfolio. CSat Investment Advisory is also relatively very bullish on the stock, earmarking 0.1 percent of its 13F equity portfolio to LEG.

As industrywide interest jumped, key money managers have been driving this bullishness. Bridgewater Associates, managed by Ray Dalio, created the biggest position in Leggett & Platt, Inc. (NYSE:LEG). Bridgewater Associates had $5.8 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also initiated a $0.8 million position during the quarter. The following funds were also among the new LEG investors: Greg Poole’s Echo Street Capital Management, Jinghua Yan’s TwinBeech Capital, and Michael Gelband’s ExodusPoint Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Leggett & Platt, Inc. (NYSE:LEG) but similarly valued. We will take a look at Brooks Automation, Inc. (NASDAQ:BRKS), Credit Acceptance Corp. (NASDAQ:CACC), Alcoa Corporation (NYSE:AA), LHC Group, Inc. (NASDAQ:LHCG), Chindata Group Holdings Limited (NASDAQ:CD), Pure Storage, Inc. (NYSE:PSTG), and Ingredion Incorporated (NYSE:INGR). This group of stocks’ market valuations are closest to LEG’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BRKS 25 253750 0
CACC 23 544483 -6
AA 38 1003019 5
LHCG 18 77772 -7
CD 9 127683 -3
PSTG 30 1090136 9
INGR 25 455337 1
Average 24 507454 -0.1

View table here if you experience formatting issues.

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 $507 million. That figure was $83 million in LEG’s case. Alcoa Corporation (NYSE:AA) is the most popular stock in this table. On the other hand Chindata Group Holdings Limited (NASDAQ:CD) is the least popular one with only 9 bullish hedge fund positions. Leggett & Platt, Inc. (NYSE:LEG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LEG is 59.7. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately LEG wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); LEG investors were disappointed as the stock returned 6.5% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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