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Hedge Funds Warming Up To Liberty Latin America Ltd. (LILAK)

In this article we will check out the progression of hedge fund sentiment towards Liberty Latin America Ltd. (NASDAQ:LILAK) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is Liberty Latin America Ltd. (NASDAQ:LILAK) a buy, sell, or hold? The best stock pickers are taking an optimistic view. The number of long hedge fund positions advanced by 4 lately. Our calculations also showed that LILAK 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.

Today there are a lot of metrics shareholders put to use to analyze their holdings. Some of the most under-the-radar metrics are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the elite money managers can trounce their index-focused peers by a healthy margin (see the details here).

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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 check out the fresh hedge fund action encompassing Liberty Latin America Ltd. (NASDAQ:LILAK).

Hedge fund activity in Liberty Latin America Ltd. (NASDAQ:LILAK)

At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the fourth quarter of 2019. By comparison, 18 hedge funds held shares or bullish call options in LILAK a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Is LILAK A Good Stock To Buy?

The largest stake in Liberty Latin America Ltd. (NASDAQ:LILAK) was held by Ashe Capital, which reported holding $87.2 million worth of stock at the end of September. It was followed by Fine Capital Partners with a $46.4 million position. Other investors bullish on the company included Two Creeks Capital Management, Wallace R. Weitz & Co., and MIG Capital. In terms of the portfolio weights assigned to each position Fine Capital Partners allocated the biggest weight to Liberty Latin America Ltd. (NASDAQ:LILAK), around 28.3% of its 13F portfolio. Ashe Capital is also relatively very bullish on the stock, designating 8.07 percent of its 13F equity portfolio to LILAK.

Now, some big names were leading the bulls’ herd. Moon Capital, managed by John W. Moon, created the most outsized position in Liberty Latin America Ltd. (NASDAQ:LILAK). Moon Capital had $4.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $3.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Greg Eisner’s Engineers Gate Manager, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Liberty Latin America Ltd. (NASDAQ:LILAK) but similarly valued. These stocks are Brandywine Realty Trust (NYSE:BDN), Advanced Energy Industries, Inc. (NASDAQ:AEIS), Casella Waste Systems Inc. (NASDAQ:CWST), and Dicks Sporting Goods Inc (NYSE:DKS). This group of stocks’ market caps are closest to LILAK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BDN 11 24156 -7
AEIS 14 58741 -6
CWST 16 147998 6
DKS 27 180902 1
Average 17 102949 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $103 million. That figure was $257 million in LILAK’s case. Dicks Sporting Goods Inc (NYSE:DKS) is the most popular stock in this table. On the other hand Brandywine Realty Trust (NYSE:BDN) is the least popular one with only 11 bullish hedge fund positions. Liberty Latin America Ltd. (NASDAQ:LILAK) 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 13.9% in 2020 through June 10th but beat the market by 14.2 percentage points. Unfortunately LILAK wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on LILAK were disappointed as the stock returned 4.8% 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.