In this article we will check out the progression of hedge fund sentiment towards Louisiana-Pacific Corporation (NYSE:LPX) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Louisiana-Pacific Corporation (NYSE:LPX) shareholders have witnessed a decrease in enthusiasm from smart money recently. LPX was in 26 hedge funds’ portfolios at the end of March. There were 29 hedge funds in our database with LPX positions at the end of the previous quarter. Our calculations also showed that LPX isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
According to most stock holders, hedge funds are seen as unimportant, outdated financial tools of the past. While there are over 8000 funds trading today, Our experts hone in on the moguls of this club, around 850 funds. These money managers oversee bulk of the hedge fund industry’s total asset base, and by keeping an eye on their best picks, Insider Monkey has deciphered a number of investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s analyze the latest hedge fund action surrounding Louisiana-Pacific Corporation (NYSE:LPX).
What does smart money think about Louisiana-Pacific Corporation (NYSE:LPX)?
At the end of the first quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LPX over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Louisiana-Pacific Corporation (NYSE:LPX) was held by Adage Capital Management, which reported holding $65.3 million worth of stock at the end of September. It was followed by Impala Asset Management with a $54 million position. Other investors bullish on the company included Millennium Management, Renaissance Technologies, and Castle Hook Partners. In terms of the portfolio weights assigned to each position Impala Asset Management allocated the biggest weight to Louisiana-Pacific Corporation (NYSE:LPX), around 7.27% of its 13F portfolio. Castle Hook Partners is also relatively very bullish on the stock, designating 1.86 percent of its 13F equity portfolio to LPX.
Because Louisiana-Pacific Corporation (NYSE:LPX) has witnessed a decline in interest from the smart money, it’s safe to say that there is a sect of funds that elected to cut their positions entirely in the first quarter. At the top of the heap, Louis Bacon’s Moore Global Investments dropped the largest investment of all the hedgies followed by Insider Monkey, valued at about $9.9 million in stock. Alexander Mitchell’s fund, Scopus Asset Management, also said goodbye to its stock, about $8.9 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 3 funds in the first quarter.
Let’s go over hedge fund activity in other stocks similar to Louisiana-Pacific Corporation (NYSE:LPX). We will take a look at Telephone & Data Systems, Inc. (NYSE:TDS), Trinity Industries, Inc. (NYSE:TRN), Altair Engineering Inc. (NASDAQ:ALTR), and Saia Inc (NASDAQ:SAIA). This group of stocks’ market values resemble LPX’s market value.
|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 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $258 million. That figure was $326 million in LPX’s case. Telephone & Data Systems, Inc. (NYSE:TDS) is the most popular stock in this table. On the other hand Altair Engineering Inc. (NASDAQ:ALTR) 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on LPX as the stock returned 38.5% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.