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 Lincoln Educational Services Corporation (NASDAQ:LINC).
Lincoln Educational Services Corporation (NASDAQ:LINC) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of March. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as AGBA Acquisition Limited (NASDAQ:AGBA), Panhandle Oil and Gas Inc. (NYSE:PHX), and Natural Gas Services Group, Inc. (NYSE:NGS) to gather more data points. Our calculations also showed that LINC 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 a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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. Keeping this in mind we’re going to view the new hedge fund action encompassing Lincoln Educational Services Corporation (NASDAQ:LINC).
What have hedge funds been doing with Lincoln Educational Services Corporation (NASDAQ:LINC)?
Heading into the second quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in LINC over the last 18 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in Lincoln Educational Services Corporation (NASDAQ:LINC) was held by Paradice Investment Management, which reported holding $5.8 million worth of stock at the end of September. It was followed by Nantahala Capital Management with a $5.4 million position. Other investors bullish on the company included Alyeska Investment Group, Renaissance Technologies, and Juniper Investment Company. In terms of the portfolio weights assigned to each position Juniper Investment Company allocated the biggest weight to Lincoln Educational Services Corporation (NASDAQ:LINC), around 2.31% of its 13F portfolio. Paradice Investment Management is also relatively very bullish on the stock, dishing out 0.64 percent of its 13F equity portfolio to LINC.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the first quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now take a look at hedge fund activity in other stocks similar to Lincoln Educational Services Corporation (NASDAQ:LINC). These stocks are AGBA Acquisition Limited (NASDAQ:AGBA), Panhandle Oil and Gas Inc. (NYSE:PHX), Natural Gas Services Group, Inc. (NYSE:NGS), and VBI Vaccines, Inc. (NASDAQ:VBIV). This group of stocks’ market caps match LINC’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $20 million in LINC’s case. Natural Gas Services Group, Inc. (NYSE:NGS) is the most popular stock in this table. On the other hand AGBA Acquisition Limited (NASDAQ:AGBA) is the least popular one with only 4 bullish hedge fund positions. Lincoln Educational Services Corporation (NASDAQ:LINC) is not the least popular stock in this group but hedge fund interest is still below average. 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on LINC as the stock returned 89.1% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.