The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards The Liberty SiriusXM Group (NASDAQ:LSXMA).
The Liberty SiriusXM Group (NASDAQ:LSXMA) has seen a decrease in activity from the world's largest hedge funds lately. The Liberty SiriusXM Group (NASDAQ:LSXMA) was in 42 hedge funds' portfolios at the end of September. The all time high for this statistic is 50. There were 46 hedge funds in our database with LSXMA holdings at the end of June. Our calculations also showed that LSXMA 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.
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 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
BAUPOST GROUP Seth Klarman
Seth Klarman of Baupost Group
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. Keeping this in mind let's review the recent hedge fund action surrounding The Liberty SiriusXM Group (NASDAQ:LSXMA).
Do Hedge Funds Think LSXMA Is A Good Stock To Buy Now?
At the end of September, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from the previous quarter. By comparison, 41 hedge funds held shares or bullish call options in LSXMA a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in The Liberty SiriusXM Group (NASDAQ:LSXMA) was held by Berkshire Hathaway, which reported holding $492.9 million worth of stock at the end of September. It was followed by D E Shaw with a $145.6 million position. Other investors bullish on the company included Citadel Investment Group, Baupost Group, and Nitorum Capital. In terms of the portfolio weights assigned to each position Raging Capital Management allocated the biggest weight to The Liberty SiriusXM Group (NASDAQ:LSXMA), around 11.02% of its 13F portfolio. Kingstown Capital Management is also relatively very bullish on the stock, earmarking 4.08 percent of its 13F equity portfolio to LSXMA.
Due to the fact that The Liberty SiriusXM Group (NASDAQ:LSXMA) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of funds who sold off their full holdings heading into Q4. Interestingly, Simon Sadler's Segantii Capital cut the largest position of all the hedgies watched by Insider Monkey, valued at about $7.2 million in stock, and James Chen's Ovata Capital Management was right behind this move, as the fund sold off about $6.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 4 funds heading into Q4.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as The Liberty SiriusXM Group (NASDAQ:LSXMA) but similarly valued. We will take a look at Cable One Inc (NYSE:CABO), Hasbro, Inc. (NASDAQ:HAS), W.P. Carey Inc. (NYSE:WPC), Cognex Corporation (NASDAQ:CGNX), NovoCure Limited (NASDAQ:NVCR), Charles River Laboratories International Inc. (NYSE:CRL), and Korea Electric Power Corporation (NYSE:KEP). All of these stocks' market caps match LSXMA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CABO,23,686716,-1 HAS,31,372962,8 WPC,23,140774,0 CGNX,28,213078,2 NVCR,22,544665,-5 CRL,36,1241143,-5 KEP,5,21191,2 Average,24,460076,0.1 [/table]
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $460 million. That figure was $1294 million in LSXMA's case. Charles River Laboratories International Inc. (NYSE:CRL) is the most popular stock in this table. On the other hand Korea Electric Power Corporation (NYSE:KEP) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks The Liberty SiriusXM Group (NASDAQ:LSXMA) is more popular among hedge funds. Our overall hedge fund sentiment score for LSXMA is 76.2. 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 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 returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on LSXMA as the stock returned 31.1% since the end of September (through 12/8) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
