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 Total Return Index ETFs returned approximately 31% in 2019 (through December 23rd). Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 41.1% during the same period, with the majority 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’ consensus 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 Live Nation Entertainment, Inc. (NYSE:LYV).
Live Nation Entertainment, Inc. (NYSE:LYV) investors should be aware of an increase in support from the world’s most elite money managers recently. Our calculations also showed that LYV isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
If you’d ask most stock holders, hedge funds are assumed to be unimportant, old investment vehicles of the past. While there are over 8000 funds with their doors open at present, Our experts look at the aristocrats of this group, approximately 750 funds. Most estimates calculate that this group of people command most of the hedge fund industry’s total capital, and by shadowing their first-class investments, Insider Monkey has revealed a few investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now we’re going to take a look at the new hedge fund action surrounding Live Nation Entertainment, Inc. (NYSE:LYV).
How are hedge funds trading Live Nation Entertainment, Inc. (NYSE:LYV)?
At the end of the third quarter, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the second quarter of 2019. On the other hand, there were a total of 38 hedge funds with a bullish position in LYV a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Live Nation Entertainment, Inc. (NYSE:LYV) was held by Select Equity Group, which reported holding $523.6 million worth of stock at the end of September. It was followed by Horizon Asset Management with a $66.7 million position. Other investors bullish on the company included GAMCO Investors, EMS Capital, and Park West Asset Management. In terms of the portfolio weights assigned to each position Yost Capital Management allocated the biggest weight to Live Nation Entertainment, Inc. (NYSE:LYV), around 17.26% of its 13F portfolio. Deep Field Asset Management is also relatively very bullish on the stock, designating 14.77 percent of its 13F equity portfolio to LYV.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Element Capital Management, managed by Jeffrey Talpins, created the biggest position in Live Nation Entertainment, Inc. (NYSE:LYV). Element Capital Management had $18.4 million invested in the company at the end of the quarter. Christopher James’s Partner Fund Management also made a $13.1 million investment in the stock during the quarter. The other funds with brand new LYV positions are Israel Englander’s Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and David E. Shaw’s D E Shaw.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Live Nation Entertainment, Inc. (NYSE:LYV) but similarly valued. We will take a look at Campbell Soup Company (NYSE:CPB), Nomura Holdings, Inc. (NYSE:NMR), Korea Electric Power Corporation (NYSE:KEP), and KB Financial Group, Inc. (NYSE:KB). All of these stocks’ market caps are closest to LYV’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 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $272 million. That figure was $1098 million in LYV’s case. Campbell Soup Company (NYSE:CPB) is the most popular stock in this table. On the other hand Nomura Holdings, Inc. (NYSE:NMR) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Live Nation Entertainment, Inc. (NYSE:LYV) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on LYV as the stock returned 43% so far in 2019 (through 12/23) 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.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.