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Is Landcadia Holdings II, Inc. (LCAHU) A Good Stock To Buy?

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Landcadia Holdings II, Inc. (NASDAQ:LCAHU) based on that data.

Hedge fund interest in Landcadia Holdings II, Inc. (NASDAQ:LCAHU) 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 LCAHU to other stocks including Sohu.com Limited (NASDAQ:SOHU), Albireo Pharma, Inc. (NASDAQ:ALBO), and Hoegh LNG Partners LP (NYSE:HMLP) to get a better sense of its popularity.

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To most shareholders, hedge funds are seen as underperforming, outdated investment vehicles of yesteryear. While there are over 8000 funds in operation at the moment, Our experts hone in on the top tier of this group, about 850 funds. It is estimated that this group of investors orchestrate the lion’s share of the smart money’s total capital, and by keeping track of their matchless stock picks, Insider Monkey has discovered a number of investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Jeffrey Tannenbaum of Fir Tree

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a glance at the latest hedge fund action encompassing Landcadia Holdings II, Inc. (NASDAQ:LCAHU).

How have hedgies been trading Landcadia Holdings II, Inc. (NASDAQ:LCAHU)?

At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LCAHU over the last 18 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

More specifically, Glazer Capital was the largest shareholder of Landcadia Holdings II, Inc. (NASDAQ:LCAHU), with a stake worth $27.7 million reported as of the end of September. Trailing Glazer Capital was Fir Tree, which amassed a stake valued at $11.3 million. Magnetar Capital, Millennium Management, and Hudson Bay Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Fort Baker Capital Management allocated the biggest weight to Landcadia Holdings II, Inc. (NASDAQ:LCAHU), around 3.24% of its 13F portfolio. Glazer Capital is also relatively very bullish on the stock, dishing out 1.85 percent of its 13F equity portfolio to LCAHU.

Since Landcadia Holdings II, Inc. (NASDAQ:LCAHU) has witnessed falling interest from hedge fund managers, logic holds that there is a sect of funds that decided to sell off their entire stakes heading into Q4. Intriguingly, John Thiessen’s Vertex One Asset Management said goodbye to the largest stake of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $2 million in stock. Phillip Goldstein, Andrew Dakos and Steven Samuels’s fund, Bulldog Investors, also dropped its stock, about $0.1 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Landcadia Holdings II, Inc. (NASDAQ:LCAHU) but similarly valued. We will take a look at Sohu.com Limited (NASDAQ:SOHU), Albireo Pharma, Inc. (NASDAQ:ALBO), Hoegh LNG Partners LP (NYSE:HMLP), and Preformed Line Products Company (NASDAQ:PLPC). This group of stocks’ market valuations are similar to LCAHU’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SOHU 10 42493 -1
ALBO 10 55546 -2
HMLP 6 15718 1
PLPC 7 22936 0
Average 8.25 34173 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $108 million in LCAHU’s case. Sohu.com Limited (NASDAQ:SOHU) is the most popular stock in this table. On the other hand Hoegh LNG Partners LP (NYSE:HMLP) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Landcadia Holdings II, Inc. (NASDAQ:LCAHU) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. Unfortunately LCAHU wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on LCAHU were disappointed as the stock returned 7.1% during the second quarter (through June 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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