Should I Avoid Liberty Global plc (LBTYA)?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 30th, so let’s proceed with the discussion of the hedge fund sentiment on Liberty Global plc (NASDAQ:LBTYA).

Is Liberty Global plc (NASDAQ:LBTYA) going to take off soon? Prominent investors were becoming less hopeful. The number of long hedge fund bets retreated by 5 in recent months. Liberty Global plc (NASDAQ:LBTYA) was in 30 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 64. Our calculations also showed that LBTYA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 35 hedge funds in our database with LBTYA holdings at the end of March.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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 we’re going to take a look at the new hedge fund action encompassing Liberty Global plc (NASDAQ:LBTYA).

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

Heading into the third quarter of 2021, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the first quarter of 2020. By comparison, 29 hedge funds held shares or bullish call options in LBTYA a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Liberty Global plc (NASDAQ:LBTYA) was held by Baupost Group, which reported holding $208 million worth of stock at the end of June. It was followed by Route One Investment Company with a $163.3 million position. Other investors bullish on the company included Renaissance Technologies, Arrowstreet Capital, and CQS Cayman LP. In terms of the portfolio weights assigned to each position Lion Point allocated the biggest weight to Liberty Global plc (NASDAQ:LBTYA), around 5.87% of its 13F portfolio. Route One Investment Company is also relatively very bullish on the stock, setting aside 3.93 percent of its 13F equity portfolio to LBTYA.

Because Liberty Global plc (NASDAQ:LBTYA) has experienced bearish sentiment from the smart money, it’s easy to see that there were a few funds that elected to cut their full holdings heading into Q3. Interestingly, Warren Buffett’s Berkshire Hathaway dropped the biggest position of the “upper crust” of funds monitored by Insider Monkey, valued at close to $86.2 million in stock. Michael Larson’s fund, Bill & Melinda Gates Foundation Trust, also dropped its stock, about $9.8 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 5 funds heading into Q3.

Let’s now review hedge fund activity in other stocks similar to Liberty Global plc (NASDAQ:LBTYA). These stocks are News Corp (NASDAQ:NWSA), James Hardie Industries plc (NYSE:JHX), GameStop Corp. (NYSE:GME), Lumen Technologies, Inc. (NYSE:LUMN), Brown & Brown, Inc. (NYSE:BRO), Masco Corporation (NYSE:MAS), and LKQ Corporation (NASDAQ:LKQ). This group of stocks’ market caps resemble LBTYA’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.9 hedge funds with bullish positions and the average amount invested in these stocks was $830 million. That figure was $806 million in LBTYA’s case. News Corp (NASDAQ:NWSA) is the most popular stock in this table. On the other hand James Hardie Industries plc (NYSE:JHX) is the least popular one with only 4 bullish hedge fund positions. Liberty Global plc (NASDAQ:LBTYA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LBTYA is 53.5. 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. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on LBTYA as the stock returned 7.9% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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