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

Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.

Live Nation Entertainment, Inc. (NYSE:LYV) was in 32 hedge funds’ portfolios at the end of the third quarter of 2016. LYV investors should be aware of a decrease in hedge fund interest recently. There were 33 hedge funds in our database with LYV holdings at the end of the previous quarter. At the end of this article we will also compare LYV to other stocks including Banco Bradesco SA (ADR) (NYSE:BBD), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), and Envision Healthcare Holdings Inc (NYSE:EVHC) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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

At the end of the third quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 3% from one quarter earlier. Hedge fund ownership of LYV peaked at the end of Q1, with 38 hedgies long the stock. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Jim Simons’ Renaissance Technologies has the number one position in Live Nation Entertainment, Inc. (NYSE:LYV), worth close to $78.6 million. Coming in second is Thomas E. Claugus of GMT Capital, with a $74.4 million position; 1.5% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism encompass Murray Stahl’s Horizon Asset Management, Ric Dillon’s Diamond Hill Capital, and Ram Seshan Venkateswaran’s Vernier Capital.

Judging by the fact that Live Nation Entertainment, Inc. (NYSE:LYV) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few hedge funds who sold off their full holdings heading into Q4. At the top of the heap, Amit Nitin Doshi’s Harbor Spring Capital dropped the largest position of all the hedgies followed by Insider Monkey, comprising close to $21.9 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also cut its stock, about $3.5 million worth. These moves are interesting, as total hedge fund interest was cut by 1 fund heading into Q4.

Let’s now take a look at hedge fund activity in other stocks similar to Live Nation Entertainment, Inc. (NYSE:LYV). We will take a look at Banco Bradesco SA (ADR) (NYSE:BBD), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), Envision Healthcare Holdings Inc (NYSE:EVHC), and WellCare Health Plans, Inc. (NYSE:WCG). All of these stocks’ market caps resemble LYV’s market cap.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $521 million. That figure was $495 million in LYV’s case. Envision Healthcare Holdings Inc (NYSE:EVHC) is the most popular stock in this table. On the other hand Banco Bradesco SA (ADR) (NYSE:BBD) is the least popular one with only 13 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 a lot of hedge funds like. In this regard EVHC might be a better candidate to consider a long position in.

Disclosure: None