Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Live Nation Entertainment, Inc. (NYSE:LYV).
Is LYV a good stock to buy now? Live Nation Entertainment, Inc. (NYSE:LYV) investors should be aware of an increase in hedge fund sentiment recently. Live Nation Entertainment, Inc. (NYSE:LYV) was in 50 hedge funds’ portfolios at the end of September. The all time high for this statistics is 46. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that LYV 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.
To the average investor there are dozens of methods stock traders put to use to analyze their stock investments. A pair of the best methods are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can outpace the S&P 500 by a very impressive amount (see the details here).
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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with 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. Now we’re going to analyze the latest hedge fund action encompassing Live Nation Entertainment, Inc. (NYSE:LYV).
What does smart money think about Live Nation Entertainment, Inc. (NYSE:LYV)?
At the end of September, a total of 50 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from one quarter earlier. On the other hand, there were a total of 44 hedge funds with a bullish position in LYV a year ago. 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, D1 Capital Partners held the most valuable stake in Live Nation Entertainment, Inc. (NYSE:LYV), which was worth $496.2 million at the end of the third quarter. On the second spot was Akre Capital Management which amassed $294.7 million worth of shares. Select Equity Group, Melvin Capital Management, and Fir Tree 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 Emerson Point Capital allocated the biggest weight to Live Nation Entertainment, Inc. (NYSE:LYV), around 4.43% of its 13F portfolio. Fir Tree is also relatively very bullish on the stock, designating 3.91 percent of its 13F equity portfolio to LYV.
Now, key hedge funds were breaking ground themselves. Melvin Capital Management, managed by Gabriel Plotkin, established the most valuable position in Live Nation Entertainment, Inc. (NYSE:LYV). Melvin Capital Management had $80.8 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $39.4 million position during the quarter. The following funds were also among the new LYV investors: Josh Resnick’s Jericho Capital Asset Management, Matt Sirovich and Jeremy Mindich’s Scopia Capital, and Daryl Smith’s Kayak Investment Partners.
Let’s go over hedge fund activity in other stocks similar to Live Nation Entertainment, Inc. (NYSE:LYV). We will take a look at Pembina Pipeline Corp (NYSE:PBA), Cheniere Energy, Inc. (NYSE:LNG), KeyCorp (NYSE:KEY), United Microelectronics Corp (NYSE:UMC), ONEOK, Inc. (NYSE:OKE), Dr. Reddy’s Laboratories Limited (NYSE:RDY), and Dynatrace, Inc. (NYSE:DT). All of these stocks’ market caps resemble LYV’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 25 hedge funds with bullish positions and the average amount invested in these stocks was $626 million. That figure was $1717 million in LYV’s case. Dynatrace, Inc. (NYSE:DT) is the most popular stock in this table. On the other hand United Microelectronics Corp (NYSE:UMC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Live Nation Entertainment, Inc. (NYSE:LYV) is more popular among hedge funds. Our overall hedge fund sentiment score for LYV 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 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 returned 31.6% in 2020 through December 2nd but still managed to beat the market by 16 percentage points. Hedge funds were also right about betting on LYV as the stock returned 29.7% since the end of September (through 12/2) 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.