Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Littelfuse, Inc. (NASDAQ:LFUS) to find out whether there were any major changes in hedge funds’ views.
Hedge fund interest in Littelfuse, Inc. (NASDAQ:LFUS) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that LFUS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). 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 Penske Automotive Group, Inc. (NYSE:PAG), Life Storage, Inc. (NYSE:LSI), and OGE Energy Corp. (NYSE:OGE) to gather more data points.
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Do Hedge Funds Think LFUS Is A Good Stock To Buy Now?
At first quarter’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 22 hedge funds held shares or bullish call options in LFUS a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in Littelfuse, Inc. (NASDAQ:LFUS) was held by Impax Asset Management, which reported holding $177.1 million worth of stock at the end of December. It was followed by Ariel Investments with a $94.7 million position. Other investors bullish on the company included Fisher Asset Management, Polar Capital, and GAMCO Investors. In terms of the portfolio weights assigned to each position Ayrshire Capital Management allocated the biggest weight to Littelfuse, Inc. (NASDAQ:LFUS), around 2.12% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, designating 1.53 percent of its 13F equity portfolio to LFUS.
Because Littelfuse, Inc. (NASDAQ:LFUS) has faced falling interest from the aggregate hedge fund industry, we can see that there were a few fund managers who sold off their full holdings heading into Q2. Interestingly, Principal Global Investors’s Columbus Circle Investors sold off the largest position of the “upper crust” of funds monitored by Insider Monkey, totaling close to $43 million in stock. Robert Rodriguez and Steven Romick’s fund, First Pacific Advisors LLC, also sold off its stock, about $1 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks similar to Littelfuse, Inc. (NASDAQ:LFUS). We will take a look at Penske Automotive Group, Inc. (NYSE:PAG), Life Storage, Inc. (NYSE:LSI), OGE Energy Corp. (NYSE:OGE), JetBlue Airways Corporation (NASDAQ:JBLU), Ritchie Bros. Auctioneers (NYSE:RBA), Pacific Biosciences of California (NASDAQ:PACB), and FirstService Corporation (TSE:FSV). All of these stocks’ market caps resemble LFUS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PAG | 12 | 188294 | -9 |
| LSI | 26 | 214869 | 9 |
| OGE | 23 | 119911 | 3 |
| JBLU | 29 | 425689 | 0 |
| RBA | 19 | 345121 | -4 |
| PACB | 24 | 1492893 | 1 |
| FSV | 17 | 238970 | 1 |
| Average | 21.4 | 432250 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.4 hedge funds with bullish positions and the average amount invested in these stocks was $432 million. That figure was $452 million in LFUS’s case. JetBlue Airways Corporation (NASDAQ:JBLU) is the most popular stock in this table. On the other hand Penske Automotive Group, Inc. (NYSE:PAG) is the least popular one with only 12 bullish hedge fund positions. Littelfuse, Inc. (NASDAQ:LFUS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LFUS is 57.7. 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 negative signal and 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 surpassed the market again by 7.7 percentage points. Unfortunately LFUS wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); LFUS investors were disappointed as the stock returned -9% 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 most of these stocks already outperformed the market in 2021.
Follow Littelfuse Inc (NASDAQ:LFUS)
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Disclosure: None. This article was originally published at Insider Monkey.
