Is Life Storage, Inc. (NYSE:LSI) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Life Storage, Inc. (NYSE:LSI) was in 15 hedge funds’ portfolios at the end of March. LSI has seen an increase in hedge fund sentiment in recent months. There were 13 hedge funds in our database with LSI holdings at the end of the previous quarter. Our calculations also showed that LSI isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a gander at the fresh hedge fund action encompassing Life Storage, Inc. (NYSE:LSI).
What does smart money think about Life Storage, Inc. (NYSE:LSI)?
At Q1’s end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in LSI over the last 15 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Life Storage, Inc. (NYSE:LSI), with a stake worth $78.2 million reported as of the end of March. Trailing Renaissance Technologies was Fisher Asset Management, which amassed a stake valued at $46.9 million. Balyasny Asset Management, Echo Street Capital Management, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, key money managers were leading the bulls’ herd. Echo Street Capital Management, managed by Greg Poole, initiated the largest position in Life Storage, Inc. (NYSE:LSI). Echo Street Capital Management had $26.5 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also made a $4.3 million investment in the stock during the quarter. The following funds were also among the new LSI investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Minhua Zhang’s Weld Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Life Storage, Inc. (NYSE:LSI) but similarly valued. We will take a look at MAXIMUS, Inc. (NYSE:MMS), CACI International Inc (NYSE:CACI), LendingTree, Inc (NASDAQ:TREE), and Virtu Financial Inc (NASDAQ:VIRT). This group of stocks’ market values resemble LSI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MMS | 20 | 288188 | -2 |
| CACI | 13 | 132826 | -5 |
| TREE | 17 | 82935 | -4 |
| VIRT | 17 | 93239 | 0 |
| Average | 16.75 | 149297 | -2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $149 million. That figure was $274 million in LSI’s case. MAXIMUS, Inc. (NYSE:MMS) is the most popular stock in this table. On the other hand CACI International Inc (NYSE:CACI) is the least popular one with only 13 bullish hedge fund positions. Life Storage, Inc. (NYSE:LSI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately LSI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); LSI investors were disappointed as the stock returned 1.7% 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
