Ladenburg Thalmann Financial Services (LTS): Are Hedge Funds Right About This Stock?

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Renaissance Technologies. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 700+ hedge funds tracked by Insider Monkey identified LTS as a viable investment and initiated a position in the stock.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Ladenburg Thalmann Financial Services (NYSEMKT:LTS) but similarly valued. These stocks are Student Transportation Inc (NASDAQ:STB), Celyad SA (EBR:CYAD), Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR), and American Public Education, Inc. (NASDAQ:APEI). This group of stocks’ market caps match LTS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
STB 6 3116 2
CYAD 4 11183 -2
AEGR 16 203191 0
APEI 10 32328 -1

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was a meager $1 million in LTS’s case. Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) is the most popular stock in this table, while Celyad SA (EBR:CYAD) is the least popular one with only 4 bullish hedge fund positions. Ladenburg Thalmann Financial Services (NYSEMKT:LTS) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AEGR might be a better candidate to consider a long position.