Here is What Hedge Funds Think About Louisiana-Pacific Corporation (LPX)

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Louisiana-Pacific Corporation (NYSE:LPX).

Louisiana-Pacific Corporation (NYSE:LPX) has seen a decrease in hedge fund sentiment lately. Louisiana-Pacific Corporation (NYSE:LPX) was in 36 hedge funds’ portfolios at the end of September. The all time high for this statistic is 41. Our calculations also showed that LPX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s take a look at the key hedge fund action regarding Louisiana-Pacific Corporation (NYSE:LPX).

Do Hedge Funds Think LPX Is A Good Stock To Buy Now?

At Q3’s end, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. On the other hand, there were a total of 40 hedge funds with a bullish position in LPX a year ago. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

The largest stake in Louisiana-Pacific Corporation (NYSE:LPX) was held by Platinum Asset Management, which reported holding $83.4 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $80.6 million position. Other investors bullish on the company included Scopus Asset Management, Impala Asset Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Appian Way Asset Management allocated the biggest weight to Louisiana-Pacific Corporation (NYSE:LPX), around 7.05% of its 13F portfolio. Sandbar Asset Management is also relatively very bullish on the stock, designating 4.94 percent of its 13F equity portfolio to LPX.

Since Louisiana-Pacific Corporation (NYSE:LPX) has experienced declining sentiment from the smart money, it’s easy to see that there were a few money managers that slashed their full holdings by the end of the third quarter. Interestingly, Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors dumped the biggest position of the 750 funds monitored by Insider Monkey, totaling an estimated $13.5 million in call options. Michael Gelband’s fund, ExodusPoint Capital, also said goodbye to its call options, about $8.1 million worth. These transactions are important to note, as total hedge fund interest was cut by 3 funds by the end of the third quarter.

Let’s now review hedge fund activity in other stocks similar to Louisiana-Pacific Corporation (NYSE:LPX). We will take a look at ZIM Integrated Shipping Services Ltd. (NYSE:ZIM), Duck Creek Technologies, Inc. (NASDAQ:DCT), eXp World Holdings, Inc. (NASDAQ:EXPI), WESCO International, Inc. (NYSE:WCC), Everbridge, Inc. (NASDAQ:EVBG), Integra Lifesciences Holdings Corp (NASDAQ:IART), and Halozyme Therapeutics, Inc. (NASDAQ:HALO). All of these stocks’ market caps are closest to LPX’s market cap.

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As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $520 million. That figure was $671 million in LPX’s case. WESCO International, Inc. (NYSE:WCC) is the most popular stock in this table. On the other hand Duck Creek Technologies, Inc. (NASDAQ:DCT) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Louisiana-Pacific Corporation (NYSE:LPX) is more popular among hedge funds. Our overall hedge fund sentiment score for LPX is 78.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on LPX as the stock returned 6.8% since the end of September (through 11/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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