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Hedge Funds Souring On U.S. Lime & Minerals Inc. (USLM)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about U.S. Lime & Minerals Inc. (NASDAQ:USLM)?

U.S. Lime & Minerals Inc. (NASDAQ:USLM) investors should pay attention to a decrease in hedge fund sentiment lately. USLM was in 3 hedge funds’ portfolios at the end of the first quarter of 2020. There were 4 hedge funds in our database with USLM holdings at the end of the previous quarter. Our calculations also showed that USLM 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).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are several methods stock traders have at their disposal to assess stocks. Some of the less known methods are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the elite money managers can trounce the broader indices by a superb margin (see the details here).

Jeffrey Bronchick - Cove Street Capital

Jeffrey Bronchick of Cove Street Capital

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 stocks recommended/scorned by legendary Bill Miller. 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. With all of this in mind we’re going to take a glance at the fresh hedge fund action encompassing U.S. Lime & Minerals Inc. (NASDAQ:USLM).

How have hedgies been trading U.S. Lime & Minerals Inc. (NASDAQ:USLM)?

At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards USLM over the last 18 quarters. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in U.S. Lime & Minerals Inc. (NASDAQ:USLM), which was worth $16.5 million at the end of the third quarter. On the second spot was Minerva Advisors which amassed $9.5 million worth of shares. Cove Street Capital was 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 Minerva Advisors allocated the biggest weight to U.S. Lime & Minerals Inc. (NASDAQ:USLM), around 7.5% of its 13F portfolio. Cove Street Capital is also relatively very bullish on the stock, earmarking 0.08 percent of its 13F equity portfolio to USLM.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Springbok Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified USLM as a viable investment and initiated a position in the stock.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as U.S. Lime & Minerals Inc. (NASDAQ:USLM) but similarly valued. We will take a look at Calix Inc (NYSE:CALX), International General Insurance Holdings Ltd. (NASDAQ:IGIC), Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY), and Xenon Pharmaceuticals Inc (NASDAQ:XENE). All of these stocks’ market caps resemble USLM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CALX 15 80773 1
IGIC 10 12057 -1
PLAY 12 75188 -7
XENE 28 218007 6
Average 16.25 96506 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $97 million. That figure was $26 million in USLM’s case. Xenon Pharmaceuticals Inc (NASDAQ:XENE) is the most popular stock in this table. On the other hand International General Insurance Holdings Ltd. (NASDAQ:IGIC) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks U.S. Lime & Minerals Inc. (NASDAQ:USLM) is even less popular than IGIC. Hedge funds dodged a bullet by taking a bearish stance towards USLM. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately USLM wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); USLM investors were disappointed as the stock returned 0.6% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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