LiveXLive Media, Inc. (LIVX): Hedge Funds In Wait-and-See Mode

In this article we will take a look at whether hedge funds think LiveXLive Media, Inc. (NASDAQ:LIVX) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

LiveXLive Media, Inc. (NASDAQ:LIVX) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of the first quarter of 2020. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as RYB Education, Inc. (NYSE:RYB), Chembio Diagnostics Inc (NASDAQ:CEMI), and Waitr Holdings Inc. (NASDAQ:WTRH) to gather more data points. Our calculations also showed that LIVX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Israel Englander of Millennium Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to check out the new hedge fund action encompassing LiveXLive Media, Inc. (NASDAQ:LIVX).

Hedge fund activity in LiveXLive Media, Inc. (NASDAQ:LIVX)

At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2019. By comparison, 0 hedge funds held shares or bullish call options in LIVX a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

Is LIVX A Good Stock To Buy?

Of the funds tracked by Insider Monkey, No Street Capital, managed by Jeff Osher, holds the largest position in LiveXLive Media, Inc. (NASDAQ:LIVX). No Street Capital has a $5 million position in the stock, comprising 1% of its 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds a $0.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position No Street Capital allocated the biggest weight to LiveXLive Media, Inc. (NASDAQ:LIVX), around 1.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0 percent of its 13F equity portfolio to LIVX.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. 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 only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was No Street Capital).

Let’s go over hedge fund activity in other stocks similar to LiveXLive Media, Inc. (NASDAQ:LIVX). We will take a look at RYB Education, Inc. (NYSE:RYB), Chembio Diagnostics Inc (NASDAQ:CEMI), Waitr Holdings Inc. (NASDAQ:WTRH), and Turtle Beach Corp (NASDAQ:HEAR). This group of stocks’ market values match LIVX’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RYB 3 6156 -1
CEMI 4 13772 1
WTRH 7 7128 -1
HEAR 10 4194 -1
Average 6 7813 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $5 million in LIVX’s case. Turtle Beach Corp (NASDAQ:HEAR) is the most popular stock in this table. On the other hand RYB Education, Inc. (NYSE:RYB) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks LiveXLive Media, Inc. (NASDAQ:LIVX) is even less popular than RYB. Hedge funds clearly dropped the ball on LIVX as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. A small number of hedge funds were also right about betting on LIVX as the stock returned 107.6% so far in the second quarter and outperformed the market by an even larger margin.

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