Is The Liberty SiriusXM Group (LSXMK) A Good Stock To Buy?

We at Insider Monkey have gone over 738 13F filings that hedge funds and famous value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article we look at what those investors think of The Liberty SiriusXM Group (NASDAQ:LSXMK).

Hedge fund interest in The Liberty SiriusXM Group (NASDAQ:LSXMK) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Autohome Inc (NYSE:ATHM), Huazhu Group Limited (NASDAQ:HTHT), and BanColombia S.A. (NYSE:CIB) to gather more data points.

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 market by 40 percentage points since May 2014 through May 30, 2019 (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 our short portfolio.

Warren Buffet, is Warren Buffet success personified, Suzanne Woolley

Warren Buffett of Berkshire Hathaway

We’re going to analyze the fresh hedge fund action surrounding The Liberty SiriusXM Group (NASDAQ:LSXMK).

How have hedgies been trading The Liberty SiriusXM Group (NASDAQ:LSXMK)?

Heading into the second quarter of 2019, a total of 45 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 41 hedge funds held shares or bullish call options in LSXMK a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with LSXMK Positions

Among these funds, Berkshire Hathaway held the most valuable stake in The Liberty SiriusXM Group (NASDAQ:LSXMK), which was worth $1188.9 million at the end of the first quarter. On the second spot was FPR Partners which amassed $268.8 million worth of shares. Moreover, D E Shaw, Horizon Asset Management, and Citadel Investment Group were also bullish on The Liberty SiriusXM Group (NASDAQ:LSXMK), allocating a large percentage of their portfolios to this stock.

Judging by the fact that The Liberty SiriusXM Group (NASDAQ:LSXMK) has witnessed falling interest from the aggregate hedge fund industry, we can see that there were a few hedge funds that elected to cut their full holdings in the third quarter. It’s worth mentioning that Mitch Kuflik and Rob Sobel’s Brahman Capital said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, valued at close to $24.1 million in stock. Matthew Drapkin and Steven R. Becker’s fund, Becker Drapkin Management, also dumped its stock, about $1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to The Liberty SiriusXM Group (NASDAQ:LSXMK). These stocks are Autohome Inc (NYSE:ATHM), Huazhu Group Limited (NASDAQ:HTHT), BanColombia S.A. (NYSE:CIB), and Advance Auto Parts, Inc. (NYSE:AAP). This group of stocks’ market caps resemble LSXMK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ATHM 16 1251641 2
HTHT 14 196127 -1
CIB 11 154486 5
AAP 47 2297068 -4
Average 22 974831 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $975 million. That figure was $2653 million in LSXMK’s case. Advance Auto Parts, Inc. (NYSE:AAP) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 11 bullish hedge fund positions. The Liberty SiriusXM Group (NASDAQ:LSXMK) is not the most popular stock in this group but hedge fund interest is still above average. 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately LSXMK wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on LSXMK were disappointed as the stock returned -3.7% during the same period 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 13 of these stocks already outperformed the market so far in Q2.

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