Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by more than 6 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Liberty Latin America Ltd. (NASDAQ:LILA).
Liberty Latin America Ltd. (NASDAQ:LILA) was in 14 hedge funds’ portfolios at the end of the first quarter of 2019. LILA has experienced an increase in hedge fund interest of late. There were 13 hedge funds in our database with LILA positions at the end of the previous quarter. Our calculations also showed that LILA 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 review the key hedge fund action surrounding Liberty Latin America Ltd. (NASDAQ:LILA).
What does smart money think about Liberty Latin America Ltd. (NASDAQ:LILA)?
At Q1’s end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LILA over the last 15 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ashe Capital, managed by William Crowley, William Harker, and Stephen Blass, holds the largest position in Liberty Latin America Ltd. (NASDAQ:LILA). Ashe Capital has a $68.7 million position in the stock, comprising 4.8% of its 13F portfolio. The second most bullish fund manager is Berkshire Hathaway, led by Warren Buffett, holding a $52.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism contain Ryan Pedlow’s Two Creeks Capital Management, Michael Larson’s Bill & Melinda Gates Foundation Trust and Paul Marshall and Ian Wace’s Marshall Wace LLP.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Renaissance Technologies, managed by Jim Simons, established the largest position in Liberty Latin America Ltd. (NASDAQ:LILA). Renaissance Technologies had $2.7 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $1.3 million position during the quarter. The following funds were also among the new LILA investors: Ken Griffin’s Citadel Investment Group and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Let’s also examine hedge fund activity in other stocks similar to Liberty Latin America Ltd. (NASDAQ:LILA). We will take a look at Telephone & Data Systems, Inc. (NYSE:TDS), Stag Industrial Inc (NYSE:STAG), Valvoline Inc. (NYSE:VVV), and Embraer SA (NYSE:ERJ). This group of stocks’ market values are similar to LILA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TDS | 23 | 438093 | 1 |
| STAG | 15 | 186424 | 3 |
| VVV | 19 | 306405 | 1 |
| ERJ | 8 | 83463 | -2 |
| Average | 16.25 | 253596 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $254 million. That figure was $164 million in LILA’s case. Telephone & Data Systems, Inc. (NYSE:TDS) is the most popular stock in this table. On the other hand Embraer SA (NYSE:ERJ) is the least popular one with only 8 bullish hedge fund positions. Liberty Latin America Ltd. (NASDAQ:LILA) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately LILA wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); LILA investors were disappointed as the stock returned -4.2% during the same time 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.
