It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 13.1% in the first 2.5 months of this year (including dividend payments). Conversely, hedge funds’ top 15 large-cap stock picks generated a return of 19.7% during the same 2.5-month period, with 93% of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Lindblad Expeditions Holdings Inc (NASDAQ:LIND).
Hedge fund interest in Lindblad Expeditions Holdings Inc (NASDAQ:LIND) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare LIND to other stocks including IRSA Propiedades Comerciales S.A. (NASDAQ:IRCP), Coherus Biosciences Inc (NASDAQ:CHRS), and Central Securities Corporation (NYSE:CET) to get a better sense of its popularity.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s analyze the fresh hedge fund action regarding Lindblad Expeditions Holdings Inc (NASDAQ:LIND).
What does the smart money think about Lindblad Expeditions Holdings Inc (NASDAQ:LIND)?
At the end of the fourth quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards LIND over the last 14 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, ValueAct Capital was the largest shareholder of Lindblad Expeditions Holdings Inc (NASDAQ:LIND), with a stake worth $31 million reported as of the end of December. Trailing ValueAct Capital was Royce & Associates, which amassed a stake valued at $14.4 million. Deep Field Asset Management, Rutabaga Capital Management, and Renaissance Technologies were also very fond of the stock, giving the stock large weights in their portfolios.
Because Lindblad Expeditions Holdings Inc (NASDAQ:LIND) has witnessed falling interest from the smart money, logic holds that there exists a select few hedgies who sold off their entire stakes by the end of the third quarter. Intriguingly, Mark Broach’s Manatuck Hill Partners dumped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, worth about $0.9 million in stock, and Bart Baum’s Ionic Capital Management was right behind this move, as the fund dropped about $0.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Lindblad Expeditions Holdings Inc (NASDAQ:LIND) but similarly valued. These stocks are IRSA Propiedades Comerciales S.A. (NASDAQ:IRCP), Coherus Biosciences Inc (NASDAQ:CHRS), Central Securities Corporation (NYSE:CET), and Care.com Inc (NYSE:CRCM). This group of stocks’ market caps match LIND’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 11 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $108 million in LIND’s case. Coherus Biosciences Inc (NASDAQ:CHRS) is the most popular stock in this table. On the other hand Central Securities Corporation (NYSE:CET) is the least popular one with only 2 bullish hedge fund positions. Lindblad Expeditions Holdings Inc (NASDAQ:LIND) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately LIND wasn’t nearly as popular as these 15 stock and hedge funds that were betting on LIND were disappointed as the stock returned 16.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.