Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is Louisiana-Pacific Corporation (NYSE:LPX) a buy here? The best stock pickers are betting on the stock. The number of long hedge fund bets moved up by 3 recently. Our calculations also showed that lpx isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to go over the fresh hedge fund action encompassing Louisiana-Pacific Corporation (NYSE:LPX).
How have hedgies been trading Louisiana-Pacific Corporation (NYSE:LPX)?
At the end of the fourth quarter, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in LPX over the last 14 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Adage Capital Management held the most valuable stake in Louisiana-Pacific Corporation (NYSE:LPX), which was worth $86 million at the end of the third quarter. On the second spot was GLG Partners which amassed $66.7 million worth of shares. Moreover, Millennium Management, Renaissance Technologies, and Owl Creek Asset Management were also bullish on Louisiana-Pacific Corporation (NYSE:LPX), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, specific money managers were breaking ground themselves. Owl Creek Asset Management, managed by Jeffrey Altman, initiated the biggest position in Louisiana-Pacific Corporation (NYSE:LPX). Owl Creek Asset Management had $23.7 million invested in the company at the end of the quarter. David Brown’s Hawk Ridge Management also initiated a $12.9 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Daniel Arbess’s Perella Weinberg Partners, and Hoon Kim’s Quantinno Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Louisiana-Pacific Corporation (NYSE:LPX) but similarly valued. We will take a look at Macquarie Infrastructure Corporation (NYSE:MIC), Cushman & Wakefield plc (NYSE:CWK), Manchester United PLC (NYSE:MANU), and Azul S.A. (NYSE:AZUL). This group of stocks’ market valuations resemble LPX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MIC | 28 | 243274 | 3 |
| CWK | 13 | 142027 | -2 |
| MANU | 9 | 61678 | 1 |
| AZUL | 11 | 145148 | 0 |
| Average | 15.25 | 148032 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $148 million. That figure was $427 million in LPX’s case. Macquarie Infrastructure Corporation (NYSE:MIC) is the most popular stock in this table. On the other hand Manchester United PLC (NYSE:MANU) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Louisiana-Pacific Corporation (NYSE:LPX) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately LPX wasn’t nearly as popular as these 15 stock and hedge funds that were betting on LPX were disappointed as the stock returned 8.1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
