Were Hedge Funds Right About Piling Into Louisiana-Pacific Corporation (LPX)?

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 December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Louisiana-Pacific Corporation (NYSE:LPX).

Louisiana-Pacific Corporation (NYSE:LPX) has seen an increase in hedge fund interest of late. Louisiana-Pacific Corporation (NYSE:LPX) was in 41 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 40. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that LPX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are a large number of tools stock traders put to use to analyze publicly traded companies. Some of the most under-the-radar tools are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can trounce the broader indices by a superb amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Nick Thakore of Diametric Capital

At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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. Keeping this in mind let’s check out the new hedge fund action surrounding Louisiana-Pacific Corporation (NYSE:LPX).

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

At Q4’s end, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in LPX over the last 22 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Platinum Asset Management was the largest shareholder of Louisiana-Pacific Corporation (NYSE:LPX), with a stake worth $76.2 million reported as of the end of December. Trailing Platinum Asset Management was Arrowstreet Capital, which amassed a stake valued at $63.7 million. Scopus Asset Management, D E Shaw, and Impala Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Voss Capital allocated the biggest weight to Louisiana-Pacific Corporation (NYSE:LPX), around 3.84% of its 13F portfolio. Impala Asset Management is also relatively very bullish on the stock, earmarking 3.67 percent of its 13F equity portfolio to LPX.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Sandbar Asset Management, managed by Michael Cowley, initiated the biggest position in Louisiana-Pacific Corporation (NYSE:LPX). Sandbar Asset Management had $16.1 million invested in the company at the end of the quarter. Andrew Byington’s Appian Way Asset Management also initiated a $6.2 million position during the quarter. The following funds were also among the new LPX investors: Nick Thakore’s Diametric Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Phil Frohlich’s Prescott Group Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Louisiana-Pacific Corporation (NYSE:LPX) but similarly valued. These stocks are Innovative Industrial Properties, Inc. (NYSE:IIPR), Simpson Manufacturing Co, Inc. (NYSE:SSD), Cannae Holdings, Inc. (NYSE:CNNE), Atlantica Sustainable Infrastructure plc (NASDAQ:AY), Hexcel Corporation (NYSE:HXL), Bank OZK (NASDAQ:OZK), and Aerojet Rocketdyne Holdings Inc (NYSE:AJRD). This group of stocks’ market caps are closest to LPX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IIPR 23 317685 3
SSD 25 219735 8
CNNE 34 534239 5
AY 14 98156 3
HXL 25 166619 5
OZK 20 260732 0
AJRD 36 802349 10
Average 25.3 342788 4.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $343 million. That figure was $526 million in LPX’s case. Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) is the most popular stock in this table. On the other hand Atlantica Sustainable Infrastructure plc (NASDAQ:AY) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Louisiana-Pacific Corporation (NYSE:LPX) is more popular among hedge funds. Our overall hedge fund sentiment score for LPX is 86. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks returned 13.6% in 2021 through April 30th but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on LPX as the stock returned 77.9% since the end of December (through 4/30) 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.

Follow Louisiana-Pacific Corp (NYSE:LPX)

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