Is LIVX A Good Stock To Buy Right Now?

In this article you are going to find out whether hedge funds think LiveXLive Media, Inc. (NASDAQ:LIVX) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is LIVX a good stock to buy now? LiveXLive Media, Inc. (NASDAQ:LIVX) has seen an increase in enthusiasm from smart money recently. LiveXLive Media, Inc. (NASDAQ:LIVX) was in 9 hedge funds’ portfolios at the end of September. The all time high for this statistics is 7. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 7 hedge funds in our database with LIVX positions at the end of the second quarter. Our calculations also showed that LIVX 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.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.


Israel Englander of Millennium Management

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. Keeping this in mind let’s go over the key hedge fund action encompassing LiveXLive Media, Inc. (NASDAQ:LIVX).

Do Hedge Funds Think LIVX Is A Good Stock To Buy Now?

At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the second quarter of 2020. On the other hand, there were a total of 1 hedge funds with a bullish position in LIVX a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

Among these funds, No Street Capital held the most valuable stake in LiveXLive Media, Inc. (NASDAQ:LIVX), which was worth $8.4 million at the end of the third quarter. On the second spot was Millennium Management which amassed $2.4 million worth of shares. Renaissance Technologies, One68 Global Capital, and Arrowstreet Capital 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 One68 Global Capital allocated the biggest weight to LiveXLive Media, Inc. (NASDAQ:LIVX), around 1.33% of its 13F portfolio. No Street Capital is also relatively very bullish on the stock, earmarking 0.99 percent of its 13F equity portfolio to LIVX.

As industrywide interest jumped, key hedge funds have been driving this bullishness. One68 Global Capital, managed by David Nguyen and Nancy Oh, established the biggest position in LiveXLive Media, Inc. (NASDAQ:LIVX). One68 Global Capital had $0.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.5 million position during the quarter. The following funds were also among the new LIVX investors: Cliff Asness’s AQR Capital Management and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s go over hedge fund activity in other stocks similar to LiveXLive Media, Inc. (NASDAQ:LIVX). These stocks are Integra Resources Corp. (NYSE:ITRG), Calyxt, Inc. (NASDAQ:CLXT), Marrone Bio Innovations Inc (NASDAQ:MBII), American Outdoor Brands, Inc. (NASDAQ:AOUT), Danaos Corporation (NYSE:DAC), SM Energy Company (NYSE:SM), and Rocky Brands, Inc. (NASDAQ:RCKY). This group of stocks’ market caps are closest to LIVX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ITRG 1 20340 1
CLXT 4 3521 1
MBII 6 16556 2
AOUT 10 21964 10
DAC 6 13566 2
SM 15 29654 -3
RCKY 8 13590 1
Average 7.1 17027 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.1 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $13 million in LIVX’s case. SM Energy Company (NYSE:SM) is the most popular stock in this table. On the other hand Integra Resources Corp. (NYSE:ITRG) is the least popular one with only 1 bullish hedge fund positions. LiveXLive Media, Inc. (NASDAQ:LIVX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LIVX is 65.6. 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. 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and beat the market again by 16.2 percentage points. Unfortunately LIVX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on LIVX were disappointed as the stock returned -2.5% since the end of September (through 12/8) 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.

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