Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we pay special attention to the hedge fund activity in the small-cap space.
Is Liberty Global plc (NASDAQ:LBTYA) a buy, sell, or hold? Hedge funds are taking a pessimistic view. The number of long hedge fund positions went down by 7 in recent months. Our calculations also showed that LBTYA isn’t among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a look at the recent hedge fund action encompassing Liberty Global plc (NASDAQ:LBTYA).
Hedge fund activity in Liberty Global plc (NASDAQ:LBTYA)
At the end of the fourth quarter, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the second quarter of 2018. By comparison, 33 hedge funds held shares or bullish call options in LBTYA a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Warren Buffett’s Berkshire Hathaway has the most valuable position in Liberty Global plc (NASDAQ:LBTYA), worth close to $422.3 million, accounting for 0.2% of its total 13F portfolio. The second most bullish fund manager is William Duhamel of Route One Investment Company, with a $190.7 million position; 6.9% of its 13F portfolio is allocated to the company. Remaining peers that are bullish comprise Farallon Capital, Larry Robbins’s Glenview Capital and Seth Klarman’s Baupost Group.
Judging by the fact that Liberty Global plc (NASDAQ:LBTYA) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there exists a select few hedgies that elected to cut their full holdings heading into Q3. Interestingly, Steve Cohen’s Point72 Asset Management dumped the biggest investment of all the hedgies monitored by Insider Monkey, valued at close to $15.6 million in stock. Jonathon Jacobson’s fund, Highfields Capital Management, also cut its stock, about $13.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 7 funds heading into Q3.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Liberty Global plc (NASDAQ:LBTYA) but similarly valued. We will take a look at IDEXX Laboratories, Inc. (NASDAQ:IDXX), The Hartford Financial Services Group Inc (NYSE:HIG), Ameren Corporation (NYSE:AEE), and W.W. Grainger, Inc. (NYSE:GWW). This group of stocks’ market caps are similar to LBTYA’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 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $732 million. That figure was $1236 million in LBTYA’s case. IDEXX Laboratories, Inc. (NASDAQ:IDXX) is the most popular stock in this table. On the other hand Ameren Corporation (NYSE:AEE) is the least popular one with only 23 bullish hedge fund positions. Liberty Global plc (NASDAQ:LBTYA) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on Liberty Global as the stock returned 22% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.