Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Liberty Expedia Holdings, Inc. (NASDAQ:LEXEA)? The smart money sentiment can provide an answer to this question.
Liberty Expedia Holdings, Inc. (NASDAQ:LEXEA) has experienced an increase in hedge fund sentiment of late. LEXEA was in 29 hedge funds’ portfolios at the end of the first quarter of 2019. There were 26 hedge funds in our database with LEXEA holdings at the end of the previous quarter. Our calculations also showed that lexea isn’t among the 30 most popular stocks among hedge funds.
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 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.
We’re going to take a glance at the latest hedge fund action regarding Liberty Expedia Holdings, Inc. (NASDAQ:LEXEA).
How are hedge funds trading Liberty Expedia Holdings, Inc. (NASDAQ:LEXEA)?
At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in LEXEA over the last 15 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, Hudson Bay Capital Management held the most valuable stake in Liberty Expedia Holdings, Inc. (NASDAQ:LEXEA), which was worth $87.2 million at the end of the first quarter. On the second spot was FPR Partners which amassed $78.1 million worth of shares. Moreover, Polar Capital, D E Shaw, and Luxor Capital Group were also bullish on Liberty Expedia Holdings, Inc. (NASDAQ:LEXEA), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, some big names were breaking ground themselves. Manikay Partners, managed by Shane Finemore, established the most outsized position in Liberty Expedia Holdings, Inc. (NASDAQ:LEXEA). Manikay Partners had $6.4 million invested in the company at the end of the quarter. John Paulson’s Paulson & Co also made a $5.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, Ken Griffin’s Citadel Investment Group, and Benjamin A. Smith’s Laurion Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Liberty Expedia Holdings, Inc. (NASDAQ:LEXEA) but similarly valued. These stocks are Integer Holdings Corporation (NYSE:ITGR), Triton International Limited (NYSE:TRTN), Acceleron Pharma Inc (NASDAQ:XLRN), and American Equity Investment Life Holding Company (NYSE:AEL). All of these stocks’ market caps are closest to LEXEA’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 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $186 million. That figure was $391 million in LEXEA’s case. Integer Holdings Corporation (NYSE:ITGR) is the most popular stock in this table. On the other hand American Equity Investment Life Holding Company (NYSE:AEL) is the least popular one with only 17 bullish hedge fund positions. Liberty Expedia Holdings, Inc. (NASDAQ:LEXEA) 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately LEXEA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on LEXEA were disappointed as the stock returned -2.7% during the same 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.