Life Time Fitness, Inc. (LTM): Are Hedge Funds Right About This Stock?

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Is Life Time Fitness, Inc. (NYSE:LTM) a buy here? Investors who are in the know are in a pessimistic mood. The number of bullish hedge fund bets stayed the same which is a slightly negative development in our experience

Life Time Fitness, Inc. (NYSE:LTM)

In the eyes of most investors, hedge funds are perceived as worthless, outdated investment tools of yesteryear. While there are greater than 8000 funds in operation today, we hone in on the masters of this club, about 450 funds. Most estimates calculate that this group oversees most of the hedge fund industry’s total asset base, and by monitoring their best stock picks, we have determined a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Just as integral, positive insider trading activity is another way to parse down the stock market universe. There are plenty of stimuli for a bullish insider to drop shares of his or her company, but just one, very simple reason why they would buy. Several academic studies have demonstrated the valuable potential of this strategy if you know what to do (learn more here).

With all of this in mind, we’re going to take a glance at the key action surrounding Life Time Fitness, Inc. (NYSE:LTM).

What have hedge funds been doing with Life Time Fitness, Inc. (NYSE:LTM)?

In preparation for this year, a total of 5 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings significantly.

Of the funds we track, Daruma Asset Management, managed by Mariko Gordon, holds the largest position in Life Time Fitness, Inc. (NYSE:LTM). Daruma Asset Management has a $37.3 million position in the stock, comprising 2.2% of its 13F portfolio. Coming in second is James Dondero of Highland Capital Management, with a $25.9 million position; 2.6% of its 13F portfolio is allocated to the company. Other peers that hold long positions include Ward Davis and Brian Agnew’s Caerus Global Investors, Ken Gray and Steve Walsh’s Bryn Mawr Capital and Ken Griffin’s Citadel Investment Group.

Judging by the fact that Life Time Fitness, Inc. (NYSE:LTM) has witnessed a declination in interest from the aggregate hedge fund industry, it’s easy to see that there were a few funds who sold off their entire stakes in Q4. At the top of the heap, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners said goodbye to the biggest position of all the hedgies we key on, worth close to $0.5 million in stock., and Paul Tudor Jones of Tudor Investment Corp was right behind this move, as the fund cut about $0.4 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about Life Time Fitness, Inc. (NYSE:LTM)?

Insider purchases made by high-level executives is most useful when the primary stock in question has seen transactions within the past 180 days. Over the last 180-day time frame, Life Time Fitness, Inc. (NYSE:LTM) has seen 1 unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Life Time Fitness, Inc. (NYSE:LTM). These stocks are Dover Motorsports, Inc. (NYSE:DVD), Bowl America Incorporated (NYSEAMEX:BWL-A), Town Sports International Holdings, Inc. (NASDAQ:CLUB), Speedway Motorsports, Inc. (NYSE:TRK), and International Speedway Corporation (NASDAQ:ISCA). This group of stocks belong to the sporting activities industry and their market caps match LTM’s market cap.

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