Between June 25 and October 30th the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors that we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Ladenburg Thalmann Financial Services (NYSEMKT:LTS) and see how the stock is affected by the recent hedge fund activity.
Is Ladenburg Thalmann Financial Services (NYSEMKT:LTS) worth your attention right now? Prominent investors are taking a pessimistic view. The number of long hedge fund positions decreased by 1 lately. At the end of this article we will also compare LTS to other stocks, including Student Transportation Inc (NASDAQ:STB), Celyad SA (EBR:CYAD), and Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) to get a better sense of its popularity.
At the moment there are a multitude of methods market participants have at their disposal to analyze their holdings. A pair of the most innovative methods are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the best money managers can outpace the S&P 500 by a significant amount (see the details here).
With all of this in mind, we’re going to check out the recent action encompassing Ladenburg Thalmann Financial Services (NYSEMKT:LTS).
What have hedge funds been doing with Ladenburg Thalmann Financial Services (NYSEAMEX:LTS)?
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decrease of 17% from one quarter earlier. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Coe Capital Management, managed by Mark Coe, holds the biggest position in Ladenburg Thalmann Financial Services (NYSEAMEX:LTS). The fund has a $0.7 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $0.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions comprise Murray Stahl’s Horizon Asset Management, Israel Englander’s Millennium Management and Dmitry Balyasny’s Balyasny Asset Management.
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|
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.