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Hedge Funds Have Never Been This Bullish On Lear Corporation (LEA)

A market surge in the first quarter, spurred by easing global macroeconomic concerns and Powell’s pivot ended up having a positive impact on the markets and many hedge funds as a result. The stocks of smaller companies which were especially hard hit during the fourth quarter slightly outperformed the market during the first quarter. Unfortunately, Trump is unpredictable and volatility returned in the second quarter and smaller-cap stocks went back to selling off. We finished compiling the latest 13F filings to get an idea about what hedge funds are thinking about the overall market as well as individual stocks. In this article we will study the hedge fund sentiment to see how those concerns affected their ownership of Lear Corporation (NYSE:LEA) during the quarter.

Lear Corporation (NYSE:LEA) has experienced an increase in enthusiasm from smart money of late. Overall hedge fund sentiment towards Lear is at its all time high. Though, our calculations also showed that LEA isn’t among the 30 most popular stocks among hedge funds.

Today there are a lot of signals stock market investors have at their disposal to appraise stocks. A duo of the most underrated signals are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the top investment managers can trounce their index-focused peers by a significant margin (see the details here).

Dmitry Balyasny

Let’s go over the new hedge fund action regarding Lear Corporation (NYSE:LEA).

What have hedge funds been doing with Lear Corporation (NYSE:LEA)?

Heading into the second quarter of 2019, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LEA over the last 15 quarters. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

LEA_jun2019

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the largest position in Lear Corporation (NYSE:LEA). Pzena Investment Management has a $354.3 million position in the stock, comprising 1.9% of its 13F portfolio. On Pzena Investment Management’s heels is AQR Capital Management, managed by Cliff Asness, which holds a $138 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions include Brandon Haley’s Holocene Advisors, Phill Gross and Robert Atchinson’s Adage Capital Management and Robert Bishop’s Impala Asset Management.

As one would reasonably expect, some big names have jumped into Lear Corporation (NYSE:LEA) headfirst. Holocene Advisors, managed by Brandon Haley, assembled the largest position in Lear Corporation (NYSE:LEA). Holocene Advisors had $54.5 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also made a $47.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Robert Bishop’s Impala Asset Management, Dmitry Balyasny’s Balyasny Asset Management, and Clint Murray’s Lodge Hill Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Lear Corporation (NYSE:LEA) but similarly valued. We will take a look at Under Armour Inc (NYSE:UA), Whirlpool Corporation (NYSE:WHR), Zions Bancorporation, National Association (NASDAQ:ZION), and Woori Financial Group Inc. (NYSE:WF). This group of stocks’ market valuations match LEA’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UA 30 934725 3
WHR 18 547948 -2
ZION 44 631442 2
WF 1 997 -1
Average 23.25 528778 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $529 million. That figure was $805 million in LEA’s case. Zions Bancorporation, National Association (NASDAQ:ZION) is the most popular stock in this table. On the other hand Woori Financial Group Inc. (NYSE:WF) is the least popular one with only 1 bullish hedge fund positions. Lear Corporation (NYSE:LEA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately LEA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on LEA were disappointed as the stock returned 0.6% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

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

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