Should You Buy Lennox International Inc. (LII)?

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Lennox International Inc. (NYSE:LII) headfirst. Sandler Capital Management established the biggest position in Lennox International Inc. (NYSE:LII). John Overdeck and David Siegel’s Two Sigma Advisors also made a $11.3 million investment in the stock during the quarter. The following funds were also among the new LII investors: Dmitry Balyasny’s Balyasny Asset Management, D. E. Shaw’s D E Shaw, and Ken Griffin’s Citadel Investment Group.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Lennox International Inc. (NYSE:LII) but similarly valued. We will take a look at Reinsurance Group of America Inc (NYSE:RGA), Mercadolibre Inc (NASDAQ:MELI), Liberty Broadband Corp (NASDAQ:LBRDK), and FMC Corp (NYSE:FMC). This group of stocks’ market valuations match LII’s market valuation.

As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $1.41 billion. That figure was $100 million in LII’s case. Liberty Broadband Corp (NASDAQ:LBRDK) is the most popular stock in this table. On the other hand Reinsurance Group of America Inc (NYSE:RGA) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Lennox International Inc. (NYSE:LII) is even less popular than RGA. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None