Is Laredo Petroleum Inc (LPI) Going to Burn These Hedge Funds?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have gone over 730 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 28th. In this article we look at what those investors think of Laredo Petroleum Inc (NYSE:LPI).

Is Laredo Petroleum Inc (NYSE:LPI) worth your attention right now? Money managers are selling. The number of bullish hedge fund bets retreated by 4 in recent months. Our calculations also showed that LPI isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To most stock holders, hedge funds are perceived as underperforming, old financial tools of years past. While there are more than 8000 funds trading at the moment, We choose to focus on the leaders of this club, about 750 funds. These hedge fund managers manage most of the smart money’s total capital, and by keeping track of their inimitable investments, Insider Monkey has found a number of investment strategies that have historically outrun the market. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points per year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .


Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s go over the new hedge fund action surrounding Laredo Petroleum Inc (NYSE:LPI).

Hedge fund activity in Laredo Petroleum Inc (NYSE:LPI)

At the end of the second quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from the first quarter of 2019. On the other hand, there were a total of 16 hedge funds with a bullish position in LPI a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Jonathan Barrett Luminus Management

More specifically, SailingStone Capital Partners was the largest shareholder of Laredo Petroleum Inc (NYSE:LPI), with a stake worth $85.9 million reported as of the end of March. Trailing SailingStone Capital Partners was Luminus Management, which amassed a stake valued at $31 million. Citadel Investment Group, Renaissance Technologies, and Water Street Capital were also very fond of the stock, giving the stock large weights in their portfolios.

Since Laredo Petroleum Inc (NYSE:LPI) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers that decided to sell off their positions entirely in the second quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the biggest investment of the 750 funds watched by Insider Monkey, worth close to $3.3 million in stock. David Costen Haley’s fund, HBK Investments, also cut its stock, about $2.5 million worth. These transactions are interesting, as total hedge fund interest fell by 4 funds in the second quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Laredo Petroleum Inc (NYSE:LPI) but similarly valued. These stocks are Regis Corporation (NYSE:RGS), eXp World Holdings, Inc. (NASDAQ:EXPI), Precision BioSciences, Inc. (NASDAQ:DTIL), and Live Oak Bancshares Inc (NASDAQ:LOB). This group of stocks’ market valuations resemble LPI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RGS 14 245467 -1
EXPI 2 323 -2
DTIL 9 64292 -5
LOB 6 33226 -4
Average 7.75 85827 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $86 million. That figure was $177 million in LPI’s case. Regis Corporation (NYSE:RGS) is the most popular stock in this table. On the other hand eXp World Holdings, Inc. (NASDAQ:EXPI) is the least popular one with only 2 bullish hedge fund positions. Laredo Petroleum Inc (NYSE:LPI) 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately LPI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on LPI were disappointed as the stock returned -16.9% during the third quarter 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 many of these stocks already outperformed the market so far this year.

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