Hedge Funds Started Cashing Out Of Liberty Broadband Corp (LBRDK)

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Liberty Broadband Corp (NASDAQ:LBRDK).

Liberty Broadband Corp (NASDAQ:LBRDK) was in 45 hedge funds’ portfolios at the end of March. LBRDK shareholders have witnessed a decrease in hedge fund sentiment of late. There were 46 hedge funds in our database with LBRDK positions at the end of the previous quarter. Our calculations also showed that LBRDK 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 44 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Philippe Laffont of Coatue Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. 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 let’s take a look at the latest hedge fund action encompassing Liberty Broadband Corp (NASDAQ:LBRDK).

How are hedge funds trading Liberty Broadband Corp (NASDAQ:LBRDK)?

At Q1’s end, a total of 45 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from one quarter earlier. By comparison, 39 hedge funds held shares or bullish call options in LBRDK a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

The largest stake in Liberty Broadband Corp (NASDAQ:LBRDK) was held by Eagle Capital Management, which reported holding $686 million worth of stock at the end of September. It was followed by Soros Fund Management with a $584.8 million position. Other investors bullish on the company included Coatue Management, Stockbridge Partners, and Cat Rock Capital. In terms of the portfolio weights assigned to each position Soros Fund Management allocated the biggest weight to Liberty Broadband Corp (NASDAQ:LBRDK), around 29.61% of its 13F portfolio. Atalan Capital is also relatively very bullish on the stock, earmarking 21.8 percent of its 13F equity portfolio to LBRDK.

Judging by the fact that Liberty Broadband Corp (NASDAQ:LBRDK) has witnessed falling interest from the smart money, we can see that there was a specific group of funds who were dropping their entire stakes in the third quarter. It’s worth mentioning that Francis Cueto’s Asturias Capital said goodbye to the biggest investment of all the hedgies monitored by Insider Monkey, totaling an estimated $12.8 million in stock. Chris Yetter’s fund, Dumont Global, also said goodbye to its stock, about $12 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 1 funds in the third quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Liberty Broadband Corp (NASDAQ:LBRDK) but similarly valued. We will take a look at ING Groep N.V. (NYSE:ING), Splunk Inc (NASDAQ:SPLK), Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), and ANSYS, Inc. (NASDAQ:ANSS). This group of stocks’ market values are closest to LBRDK’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ING 13 298860 -1
SPLK 37 340300 -1
ALXN 56 3058097 8
ANSS 31 1059903 -2
Average 34.25 1189290 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.25 hedge funds with bullish positions and the average amount invested in these stocks was $1189 million. That figure was $3334 million in LBRDK’s case. Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is the most popular stock in this table. On the other hand ING Groep N.V. (NYSE:ING) is the least popular one with only 13 bullish hedge fund positions. Liberty Broadband Corp (NASDAQ:LBRDK) 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 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 gained 7.9% in 2020 through May 22nd but beat the market by 15.6 percentage points. Unfortunately LBRDK wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on LBRDK were disappointed as the stock returned 13.9% during the same time 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 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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