In this article we will take a look at whether hedge funds think Luxfer Holdings PLC (NYSE:LXFR) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is LXFR a good stock to buy now? Luxfer Holdings PLC (NYSE:LXFR) has seen an increase in enthusiasm from smart money lately. Luxfer Holdings PLC (NYSE:LXFR) was in 12 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 14. There were 11 hedge funds in our database with LXFR holdings at the end of June. Our calculations also showed that LXFR 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Paul Marshall Marshall Wace
Paul Marshall of Marshall Wace
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 go over the recent hedge fund action encompassing Luxfer Holdings PLC (NYSE:LXFR).
Do Hedge Funds Think LXFR Is A Good Stock To Buy Now?
At third quarter's end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LXFR over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Paradice Investment Management, managed by David Paradice, holds the largest position in Luxfer Holdings PLC (NYSE:LXFR). Paradice Investment Management has a $29.7 million position in the stock, comprising 2.1% of its 13F portfolio. The second largest stake is held by Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, which holds a $28.6 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish consist of Peter Schliemann's Rutabaga Capital Management, Chuck Royce's Royce & Associates and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to Luxfer Holdings PLC (NYSE:LXFR), around 2.27% of its 13F portfolio. Paradice Investment Management is also relatively very bullish on the stock, designating 2.15 percent of its 13F equity portfolio to LXFR.
Consequently, key money managers have jumped into Luxfer Holdings PLC (NYSE:LXFR) headfirst. Millennium Management, managed by Israel Englander, assembled the largest position in Luxfer Holdings PLC (NYSE:LXFR). Millennium Management had $0.9 million invested in the company at the end of the quarter. John Overdeck and David Siegel's Two Sigma Advisors also made a $0.4 million investment in the stock during the quarter. The only other fund with a new position in the stock is Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's now review hedge fund activity in other stocks similar to Luxfer Holdings PLC (NYSE:LXFR). These stocks are International General Insurance Holdings Ltd. (NASDAQ:IGIC), Comtech Telecommunications Corp. (NASDAQ:CMTL), Cadiz Inc (NASDAQ:CDZI), Experience Investment Corp. (NASDAQ:EXPC), Orchid Island Capital, Inc. (NYSE:ORC), Osmotica Pharmaceuticals plc (NASDAQ:OSMT), and HF Foods Group Inc. (NASDAQ:HFFG). This group of stocks' market valuations match LXFR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IGIC,9,11712,0 CMTL,12,36285,-1 CDZI,7,5833,-2 EXPC,19,95338,6 ORC,4,11068,0 OSMT,9,20041,-1 HFFG,2,2156,-1 Average,8.9,26062,0.1 [/table]
As you can see these stocks had an average of 8.9 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $71 million in LXFR's case. Experience Investment Corp. (NASDAQ:EXPC) is the most popular stock in this table. On the other hand HF Foods Group Inc. (NASDAQ:HFFG) is the least popular one with only 2 bullish hedge fund positions. Luxfer Holdings PLC (NYSE:LXFR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LXFR is 61.1. 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 gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on LXFR as the stock returned 41.8% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
