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Hedge Funds Have Never Been This Bullish On Lamar Advertising (LAMR)

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Lamar Advertising Company (REIT)(NASDAQ:LAMR) based on that data.

Is Lamar Advertising Company (REIT) (NASDAQ:LAMR) a safe investment right now? Prominent investors are betting on the stock. The number of bullish hedge fund positions rose by 6 in recent months. Our calculations also showed that LAMR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). LAMR was in 34 hedge funds’ portfolios at the end of March. There were 28 hedge funds in our database with LAMR positions at the end of the previous quarter.

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 51 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.

Blair Levinsky of Waratah Capital Advisors

Blair Levinsky of Waratah Capital Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a peek at the new hedge fund action encompassing Lamar Advertising Company (REIT) (NASDAQ:LAMR).

What have hedge funds been doing with Lamar Advertising Company (REIT) (NASDAQ:LAMR)?

At Q1’s end, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LAMR over the last 18 quarters. So, let’s find out 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,  holds the biggest position in Lamar Advertising Company (REIT) (NASDAQ:LAMR). Renaissance Technologies has a $86.1 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Brad Dunkley and Blair Levinsky of Waratah Capital Advisors, with a $22.6 million position; 4% of its 13F portfolio is allocated to the stock. Some other members of the smart money that are bullish encompass Peter Lewis’s LFL Advisers, Robert Joseph Caruso’s Select Equity Group and Greg Poole’s Echo Street Capital Management. In terms of the portfolio weights assigned to each position LFL Advisers allocated the biggest weight to Lamar Advertising Company (REIT) (NASDAQ:LAMR), around 9.35% of its 13F portfolio. Gratia Capital is also relatively very bullish on the stock, earmarking 6.78 percent of its 13F equity portfolio to LAMR.

As one would reasonably expect, some big names have been driving this bullishness. Select Equity Group, managed by Robert Joseph Caruso, established the largest position in Lamar Advertising Company (REIT) (NASDAQ:LAMR). Select Equity Group had $13.8 million invested in the company at the end of the quarter. Brian J. Higgins’s King Street Capital also initiated a $9.7 million position during the quarter. The other funds with brand new LAMR positions are David Brown’s Hawk Ridge Management, Phill Gross and Robert Atchinson’s Adage Capital Management, and Steve Cohen’s Point72 Asset Management.

Let’s now review hedge fund activity in other stocks similar to Lamar Advertising Company (REIT) (NASDAQ:LAMR). These stocks are ON Semiconductor Corporation (NASDAQ:ON), Aegon N.V. (NYSE:AEG), United Microelectronics Corp (NYSE:UMC), and The New York Times Company (NYSE:NYT). This group of stocks’ market valuations are similar to LAMR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ON 29 153091 -3
AEG 4 16681 -2
UMC 15 98878 1
NYT 33 1414913 -2
Average 20.25 420891 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $421 million. That figure was $217 million in LAMR’s case. The New York Times Company (NYSE:NYT) is the most popular stock in this table. On the other hand Aegon N.V. (NYSE:AEG) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Lamar Advertising Company (REIT)(NASDAQ:LAMR) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on LAMR as the stock returned 29.3% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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