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Live Nation Entertainment, Inc. (LYV): Are Hedge Funds Right About This Stock?

During the first half of the fourth quarter the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by about 4 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only 298 S&P 500 constituents were among the 500 most popular stocks among hedge funds), 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 Live Nation Entertainment, Inc. (NYSE:LYV) and see how the stock is affected by the recent hedge fund activity.

Live Nation Entertainment, Inc. (NYSE:LYV) was in 38 hedge funds’ portfolios at the end of the third quarter of 2018. LYV investors should pay attention to an increase in enthusiasm from smart money of late. There were 32 hedge funds in our database with LYV holdings at the end of the previous quarter. Our calculations also showed that LYV isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

RENAISSANCE TECHNOLOGIES

We’re going to take a look at the recent hedge fund action surrounding Live Nation Entertainment, Inc. (NYSE:LYV).

What have hedge funds been doing with Live Nation Entertainment, Inc. (NYSE:LYV)?

Heading into the fourth quarter of 2018, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LYV over the last 13 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

LYV_dec2018

The largest stake in Live Nation Entertainment, Inc. (NYSE:LYV) was held by Select Equity Group, which reported holding $366.1 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $96.5 million position. Other investors bullish on the company included Horizon Asset Management, Diamond Hill Capital, and GAMCO Investors.

As aggregate interest increased, specific money managers were breaking ground themselves. Honeycomb Asset Management, managed by David Fiszel, initiated the most outsized position in Live Nation Entertainment, Inc. (NYSE:LYV). Honeycomb Asset Management had $40.9 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $19 million position during the quarter. The following funds were also among the new LYV investors: Dmitry Balyasny’s Balyasny Asset Management, Israel Englander’s Millennium Management, and Jack Ripsteen’s Potrero Capital Research.

Let’s now review hedge fund activity in other stocks similar to Live Nation Entertainment, Inc. (NYSE:LYV). We will take a look at NRG Energy Inc (NYSE:NRG), ANGI Homeservices Inc. (NASDAQ:ANGI), Masco Corporation (NYSE:MAS), and Canopy Growth Corporation (NYSE:CGC). This group of stocks’ market caps are closest to LYV’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NRG 50 2189506 1
ANGI 19 482435 6
MAS 35 1069198 5
CGC 16 113854 9
Average 30 963748 5.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $964 million. That figure was $967 million in LYV’s case. NRG Energy Inc (NYSE:NRG) is the most popular stock in this table. On the other hand Canopy Growth Corporation (NYSE:CGC) is the least popular one with only 16 bullish hedge fund positions. Live Nation Entertainment, Inc. (NYSE:LYV) 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. In this regard NRG might be a better candidate to consider a long position.

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

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