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Were Hedge Funds Right About Flocking Into LiveRamp Holdings, Inc. (RAMP) ?

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards LiveRamp Holdings, Inc. (NYSE:RAMP).

LiveRamp Holdings, Inc. (NYSE:RAMP) investors should pay attention to an increase in hedge fund interest in recent months. RAMP was in 18 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 15 hedge funds in our database with RAMP holdings at the end of the previous quarter. Our calculations also showed that ramp isn’t among the 30 most popular stocks among hedge funds.

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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

D. E. Shaw

We’re going to analyze the latest hedge fund action encompassing LiveRamp Holdings, Inc. (NYSE:RAMP).

How are hedge funds trading LiveRamp Holdings, Inc. (NYSE:RAMP)?

Heading into the first quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in RAMP a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds With RAMP Positions

More specifically, Abrams Bison Investments was the largest shareholder of LiveRamp Holdings, Inc. (NYSE:RAMP), with a stake worth $81.6 million reported as of the end of September. Trailing Abrams Bison Investments was Millennium Management, which amassed a stake valued at $80.9 million. Citadel Investment Group, RGM Capital, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.

As aggregate interest increased, key money managers were breaking ground themselves. Abrams Bison Investments, managed by Gavin M. Abrams, initiated the biggest position in LiveRamp Holdings, Inc. (NYSE:RAMP). Abrams Bison Investments had $81.6 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $80.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Robert G. Moses’s RGM Capital, and D. E. Shaw’s D E Shaw.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as LiveRamp Holdings, Inc. (NYSE:RAMP) but similarly valued. We will take a look at Kennedy-Wilson Holdings Inc (NYSE:KW), Liberty Latin America Ltd. (NASDAQ:LILA), Ardagh Group S.A. (NYSE:ARD), and Chemical Financial Corporation (NASDAQ:CHFC). This group of stocks’ market values resemble RAMP’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KW 13 428350 1
LILA 13 129644 2
ARD 10 41540 2
CHFC 10 36182 2
Average 11.5 158929 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $159 million. That figure was $314 million in RAMP’s case. Kennedy-Wilson Holdings Inc (NYSE:KW) is the most popular stock in this table. On the other hand Ardagh Group S.A. (NYSE:ARD) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks LiveRamp Holdings, Inc. (NYSE:RAMP) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on RAMP as the stock returned 47.3% and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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