Livent Corporation (LTHM): Hedge Funds Are Snapping Up

Is Livent Corporation (NYSE:LTHM) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Livent Corporation (NYSE:LTHM) was in 22 hedge funds’ portfolios at the end of March. The all time high for this statistic is 25. LTHM shareholders have witnessed an increase in enthusiasm from smart money lately. There were 20 hedge funds in our database with LTHM holdings at the end of December. Our calculations also showed that LTHM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In today’s marketplace there are several metrics stock traders can use to grade publicly traded companies. A pair of the most underrated metrics are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can beat the market by a very impressive amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website.

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a gander at the fresh hedge fund action encompassing Livent Corporation (NYSE:LTHM).

Do Hedge Funds Think LTHM Is A Good Stock To Buy Now?

At the end of March, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in LTHM over the last 23 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Is LTHM A Good Stock To Buy?

The largest stake in Livent Corporation (NYSE:LTHM) was held by Joho Capital, which reported holding $65.4 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $41.8 million position. Other investors bullish on the company included Royce & Associates, Axel Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Joho Capital allocated the biggest weight to Livent Corporation (NYSE:LTHM), around 10.16% of its 13F portfolio. Axel Capital Management is also relatively very bullish on the stock, designating 9.49 percent of its 13F equity portfolio to LTHM.

As one would reasonably expect, some big names were leading the bulls’ herd. GLG Partners, managed by Noam Gottesman, initiated the most valuable position in Livent Corporation (NYSE:LTHM). GLG Partners had $2.9 million invested in the company at the end of the quarter. Jack Ripsteen’s Potrero Capital Research also made a $1.8 million investment in the stock during the quarter. The following funds were also among the new LTHM investors: Robert Vincent McHugh’s Jade Capital Advisors, Minhua Zhang’s Weld Capital Management, and Greg Eisner’s Engineers Gate Manager.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Livent Corporation (NYSE:LTHM) but similarly valued. We will take a look at Big Lots, Inc. (NYSE:BIG), Global Blood Therapeutics Inc (NASDAQ:GBT), Ligand Pharmaceuticals Inc. (NASDAQ:LGND), Murphy Oil Corporation (NYSE:MUR), First Merchants Corporation (NASDAQ:FRME), The St. Joe Company (NYSE:JOE), and Callaway Golf Company (NYSE:ELY). All of these stocks’ market caps are similar to LTHM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BIG 20 229903 1
GBT 19 594683 -7
LGND 13 61979 -6
MUR 20 139295 2
FRME 11 135533 2
JOE 17 1178397 5
ELY 40 504141 0
Average 20 406276 -0.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $406 million. That figure was $193 million in LTHM’s case. Callaway Golf Company (NYSE:ELY) is the most popular stock in this table. On the other hand First Merchants Corporation (NASDAQ:FRME) is the least popular one with only 11 bullish hedge fund positions. Livent Corporation (NYSE:LTHM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LTHM is 52.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately LTHM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LTHM were disappointed as the stock returned 3.1% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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