Where Do Hedge Funds Stand On loanDepot, Inc. (LDI)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of loanDepot, Inc. (NYSE:LDI).

Is loanDepot, Inc. (NYSE:LDI) undervalued? The best stock pickers were taking a bullish view. The number of bullish hedge fund positions advanced by 6 lately. loanDepot, Inc. (NYSE:LDI) was in 6 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that LDI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 115 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, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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 we’re going to view the recent hedge fund action encompassing loanDepot, Inc. (NYSE:LDI).

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

At the end of March, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6 from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LDI over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in loanDepot, Inc. (NYSE:LDI) was held by HBK Investments, which reported holding $2 million worth of stock at the end of December. It was followed by Rokos Capital Management with a $2 million position. Other investors bullish on the company included Basswood Capital, Woodline Partners, and Laurion Capital Management. In terms of the portfolio weights assigned to each position Basswood Capital allocated the biggest weight to loanDepot, Inc. (NYSE:LDI), around 0.08% of its 13F portfolio. Woodline Partners is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to LDI.

As aggregate interest increased, some big names were leading the bulls’ herd. HBK Investments, managed by David Costen Haley, created the most valuable position in loanDepot, Inc. (NYSE:LDI). HBK Investments had $2 million invested in the company at the end of the quarter. Chris Rokos’s Rokos Capital Management also initiated a $2 million position during the quarter. The other funds with brand new LDI positions are Matthew Lindenbaum’s Basswood Capital, Michael Rockefeller and KarláKroeker’s Woodline Partners, and Benjamin A. Smith’s Laurion Capital Management.

Let’s also examine hedge fund activity in other stocks similar to loanDepot, Inc. (NYSE:LDI). We will take a look at Gildan Activewear Inc (NYSE:GIL), Saia Inc (NASDAQ:SAIA), Leggett & Platt, Inc. (NYSE:LEG), Brooks Automation, Inc. (NASDAQ:BRKS), Credit Acceptance Corp. (NASDAQ:CACC), Alcoa Corporation (NYSE:AA), and LHC Group, Inc. (NASDAQ:LHCG). This group of stocks’ market values are similar to LDI’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $432 million. That figure was $8 million in LDI’s case. Alcoa Corporation (NYSE:AA) is the most popular stock in this table. On the other hand Saia Inc (NASDAQ:SAIA) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks loanDepot, Inc. (NYSE:LDI) is even less popular than SAIA. Our overall hedge fund sentiment score for LDI is 10. 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. Hedge funds dodged a bullet by taking a bearish stance towards LDI. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th but managed to beat the market again by 4.8 percentage points. Unfortunately LDI wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); LDI investors were disappointed as the stock returned -32.6% since the end of the first quarter (through 6/25) 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 since 2019.

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