It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren’t usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index’s returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you’d fail to beat the market. At the same time, the 20 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated an outperformance of more than 8 percentage points so far in 2019. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in The LGL Group, Inc. (NYSE:LGL).
The LGL Group, Inc. (NYSE:LGL) shareholders have witnessed an increase in support from the world’s most elite money managers of late. LGL was in 4 hedge funds’ portfolios at the end of the third quarter of 2019. There were 3 hedge funds in our database with LGL positions at the end of the previous quarter. Our calculations also showed that LGL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are several gauges shareholders employ to size up their holdings. A couple of the most underrated gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can trounce the market by a very impressive amount (see the details here).
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now let’s view the recent hedge fund action regarding The LGL Group, Inc. (NYSE:LGL).
What have hedge funds been doing with The LGL Group, Inc. (NYSE:LGL)?
At Q3’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the second quarter of 2019. By comparison, 3 hedge funds held shares or bullish call options in LGL a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, GAMCO Investors, managed by Mario Gabelli, holds the largest position in The LGL Group, Inc. (NYSE:LGL). GAMCO Investors has a $5.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, which holds a $2.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include David P. Cohen’s Minerva Advisors, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital and . In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to The LGL Group, Inc. (NYSE:LGL), around 0.39% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, designating 0.05 percent of its 13F equity portfolio to LGL.
As one would reasonably expect, specific money managers have jumped into The LGL Group, Inc. (NYSE:LGL) headfirst. Springbok Capital, managed by Gavin Saitowitz and Cisco J. del Valle, created the most outsized position in The LGL Group, Inc. (NYSE:LGL). Springbok Capital had $0 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks similar to The LGL Group, Inc. (NYSE:LGL). These stocks are Synacor Inc (NASDAQ:SYNC), Dawson Geophysical Company (NASDAQ:DWSN), Elmira Savings Bank NY (The) (NASDAQ:ESBK), and Ever-Glory International Group, Inc. (NASDAQ:EVK). All of these stocks’ market caps resemble LGL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SYNC | 6 | 8111 | 1 |
| DWSN | 8 | 5741 | 0 |
| ESBK | 1 | 367 | 0 |
| EVK | 1 | 52 | 0 |
| Average | 4 | 3568 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $9 million in LGL’s case. Dawson Geophysical Company (NASDAQ:DWSN) is the most popular stock in this table. On the other hand Elmira Savings Bank NY (The) (NASDAQ:ESBK) is the least popular one with only 1 bullish hedge fund positions. The LGL Group, Inc. (NYSE:LGL) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on LGL as the stock returned 34.1% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.