At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Laird Superfood, Inc. (NYSE:LSF) makes for a good investment right now.
Is LSF a good stock to buy now? Investors who are in the know were becoming more confident. The number of bullish hedge fund positions inched up by 12 recently. Laird Superfood, Inc. (NYSE:LSF) was in 12 hedge funds' portfolios at the end of September. Our calculations also showed that LSF isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Richard Driehaus of Driehaus Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind we're going to take a look at the recent hedge fund action encompassing Laird Superfood, Inc. (NYSE:LSF).
Do Hedge Funds Think LSF Is A Good Stock To Buy Now?
At third quarter's end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12 from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in LSF a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Laird Superfood, Inc. (NYSE:LSF) was held by Callodine Capital Management, which reported holding $9.8 million worth of stock at the end of September. It was followed by Driehaus Capital with a $9.3 million position. Other investors bullish on the company included Pura Vida Investments, Impax Asset Management, and Alyeska Investment Group. In terms of the portfolio weights assigned to each position Callodine Capital Management allocated the biggest weight to Laird Superfood, Inc. (NYSE:LSF), around 5.2% of its 13F portfolio. Manatuck Hill Partners is also relatively very bullish on the stock, earmarking 0.84 percent of its 13F equity portfolio to LSF.
As one would reasonably expect, specific money managers were breaking ground themselves. Callodine Capital Management, managed by James Morrow, initiated the most outsized position in Laird Superfood, Inc. (NYSE:LSF). Callodine Capital Management had $9.8 million invested in the company at the end of the quarter. Richard Driehaus's Driehaus Capital also made a $9.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Efrem Kamen's Pura Vida Investments, Ian Simm's Impax Asset Management, and Anand Parekh's Alyeska Investment Group.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Laird Superfood, Inc. (NYSE:LSF) but similarly valued. We will take a look at Diamond Hill Investment Group, Inc. (NASDAQ:DHIL), BeyondSpring, Inc. (NASDAQ:BYSI), Sierra Wireless, Inc. (NASDAQ:SWIR), Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL), Organogenesis Holdings Inc. (NASDAQ:ORGO), Rubius Therapeutics, Inc. (NASDAQ:RUBY), and Syros Pharmaceuticals, Inc. (NASDAQ:SYRS). All of these stocks' market caps are closest to LSF's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DHIL,9,42666,-1 BYSI,4,2153,-1 SWIR,7,101606,0 RIGL,20,79795,2 ORGO,2,3335,-1 RUBY,10,3355,3 SYRS,13,36911,-2 Average,9.3,38546,0 [/table]
As you can see these stocks had an average of 9.3 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $37 million in LSF's case. Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) is the most popular stock in this table. On the other hand Organogenesis Holdings Inc. (NASDAQ:ORGO) is the least popular one with only 2 bullish hedge fund positions. Laird Superfood, Inc. (NYSE:LSF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LSF is 54.4. 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 positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and beat the market again by 16.2 percentage points. Unfortunately LSF wasn't nearly as popular as these 20 stocks and hedge funds that were betting on LSF were disappointed as the stock returned -0.3% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Get real-time email alerts: Follow Laird Superfood Inc. (NYSE:LSF)
Disclosure: None. This article was originally published at Insider Monkey.
