Is LPLA Stock A Buy or Sell?

The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards LPL Financial Holdings Inc (NASDAQ:LPLA).

Is LPL stock a buy or sell? The best stock pickers were getting more bullish. The number of bullish hedge fund positions increased by 6 recently. LPL Financial Holdings Inc (NASDAQ:LPLA) was in 43 hedge funds’ portfolios at the end of December. The all time high for this statistic is 43. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that LPLA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 37 hedge funds in our database with LPLA holdings at the end of September.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Parag Vora - HG Vora Capital

Parag Vora of HG Vora Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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. With all of this in mind we’re going to take a glance at the fresh hedge fund action surrounding LPL Financial Holdings Inc (NASDAQ:LPLA).

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

At the end of the fourth quarter, a total of 43 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from one quarter earlier. By comparison, 41 hedge funds held shares or bullish call options in LPLA a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is LPLA A Good Stock To Buy?

The largest stake in LPL Financial Holdings Inc (NASDAQ:LPLA) was held by Samlyn Capital, which reported holding $326.1 million worth of stock at the end of December. It was followed by Southpoint Capital Advisors with a $182.4 million position. Other investors bullish on the company included First Pacific Advisors LLC, Junto Capital Management, and HG Vora Capital Management. In terms of the portfolio weights assigned to each position Engle Capital allocated the biggest weight to LPL Financial Holdings Inc (NASDAQ:LPLA), around 10.64% of its 13F portfolio. Azora Capital is also relatively very bullish on the stock, designating 6.47 percent of its 13F equity portfolio to LPLA.

As industrywide interest jumped, key money managers were breaking ground themselves. Azora Capital, managed by Ravi Chopra, initiated the biggest position in LPL Financial Holdings Inc (NASDAQ:LPLA). Azora Capital had $71.4 million invested in the company at the end of the quarter. Zachary Miller’s Parian Global Management also initiated a $13.5 million position during the quarter. The other funds with brand new LPLA positions are Ryan Caldwell’s Chiron Investment Management, Daniel Johnson’s Gillson Capital, and Renaissance Technologies.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as LPL Financial Holdings Inc (NASDAQ:LPLA) but similarly valued. These stocks are Athene Holding Ltd. (NYSE:ATH), Tata Motors Limited (NYSE:TTM), Vereit Inc (NYSE:VER), Omega Healthcare Investors Inc (NYSE:OHI), Encompass Health Corporation (NYSE:EHC), Companhia Siderurgica Nacional (NYSE:SID), and Owens Corning (NYSE:OC). This group of stocks’ market valuations resemble LPLA’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ATH 36 1146379 5
TTM 7 40441 -3
VER 23 683956 5
OHI 15 101266 -4
EHC 35 758170 3
SID 9 43048 2
OC 38 377647 -5
Average 23.3 450130 0.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.3 hedge funds with bullish positions and the average amount invested in these stocks was $450 million. That figure was $1162 million in LPLA’s case. Owens Corning (NYSE:OC) is the most popular stock in this table. On the other hand Tata Motors Limited (NYSE:TTM) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks LPL Financial Holdings Inc (NASDAQ:LPLA) is more popular among hedge funds. Our overall hedge fund sentiment score for LPLA is 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on LPLA as the stock returned 40.6% since the end of December (through 3/19) 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.

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