Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about LightPath Technologies, Inc. (NASDAQ:LPTH) in this article.
Is LightPath Technologies (LPTH) a good stock to buy now? LPTH has seen a decrease in enthusiasm from smart money of late. LightPath Technologies, Inc. (NASDAQ:LPTH) was in 5 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 7. Our calculations also showed that LPTH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most investors, hedge funds are viewed as slow, old financial tools of yesteryear. While there are over 8000 funds with their doors open today, Our researchers choose to focus on the crème de la crème of this group, about 850 funds. It is estimated that this group of investors direct bulk of the hedge fund industry’s total capital, and by paying attention to their inimitable equity investments, Insider Monkey has determined several investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy exceeded 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 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s analyze the new hedge fund action encompassing LightPath Technologies, Inc. (NASDAQ:LPTH).
How are hedge funds trading LightPath Technologies, Inc. (NASDAQ:LPTH)?
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from one quarter earlier. By comparison, 3 hedge funds held shares or bullish call options in LPTH a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in LightPath Technologies, Inc. (NASDAQ:LPTH), which was worth $3.4 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $3.1 million worth of shares. Citadel Investment Group, Arrowstreet Capital, and Millennium 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 Royce & Associates allocated the biggest weight to LightPath Technologies, Inc. (NASDAQ:LPTH), around 0.03% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0034 percent of its 13F equity portfolio to LPTH.
Due to the fact that LightPath Technologies, Inc. (NASDAQ:LPTH) has experienced a decline in interest from the smart money, logic holds that there was a specific group of funds who were dropping their full holdings last quarter. At the top of the heap, Ken Grossman and Glen Schneider’s SG Capital Management sold off the biggest position of all the hedgies watched by Insider Monkey, valued at close to $0.5 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund sold off about $0.1 million worth. These moves are interesting, as total hedge fund interest dropped by 2 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as LightPath Technologies, Inc. (NASDAQ:LPTH) but similarly valued. We will take a look at Riverview Financial Corporation (NASDAQ:RIVE), Golden Minerals Co (NYSE:AUMN), Qumu Corp (NASDAQ:QUMU), Zomedica Pharmaceuticals Corp. (NYSE:ZOM), Medallion Financial Corp. (NASDAQ:MFIN), Scully Royalty Ltd. (NYSE:SRL), and Oramed Pharmaceuticals Inc. (NASDAQ:ORMP). All of these stocks’ market caps match LPTH’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 4.1 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $7 million in LPTH’s case. Oramed Pharmaceuticals Inc. (NASDAQ:ORMP) is the most popular stock in this table. On the other hand Golden Minerals Co (NYSE:AUMN) is the least popular one with only 1 bullish hedge fund positions. LightPath Technologies, Inc. (NASDAQ:LPTH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LPTH is 57.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on LPTH as the stock returned 31.1% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.