Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Lumentum Holdings Inc (NASDAQ:LITE) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Lumentum Holdings Inc (NASDAQ:LITE) was in 33 hedge funds’ portfolios at the end of September. The all time high for this statistic is 42. LITE investors should be aware of an increase in support from the world’s most elite money managers of late. There were 29 hedge funds in our database with LITE positions at the end of the second quarter. Our calculations also showed that LITE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. With all of this in mind let’s review the new hedge fund action regarding Lumentum Holdings Inc (NASDAQ:LITE).
Do Hedge Funds Think LITE Is A Good Stock To Buy Now?
At third quarter’s end, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards LITE over the last 25 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, ValueAct Capital was the largest shareholder of Lumentum Holdings Inc (NASDAQ:LITE), with a stake worth $83.5 million reported as of the end of September. Trailing ValueAct Capital was Fisher Asset Management, which amassed a stake valued at $71.7 million. Point72 Asset Management, Citadel Investment Group, and Pentwater Capital 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 Boardman Bay Capital Management allocated the biggest weight to Lumentum Holdings Inc (NASDAQ:LITE), around 6.86% of its 13F portfolio. Divisar Capital is also relatively very bullish on the stock, earmarking 6.74 percent of its 13F equity portfolio to LITE.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Point72 Asset Management, managed by Steve Cohen, created the most valuable position in Lumentum Holdings Inc (NASDAQ:LITE). Point72 Asset Management had $54 million invested in the company at the end of the quarter. Suraj Parkash Chopra’s Force Hill Capital Management also made a $15.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Dmitry Balyasny’s Balyasny Asset Management, and Joe DiMenna’s ZWEIG DIMENNA PARTNERS.
Let’s now take a look at hedge fund activity in other stocks similar to Lumentum Holdings Inc (NASDAQ:LITE). We will take a look at Primerica, Inc. (NYSE:PRI), Allegro MicroSystems, Inc. (NASDAQ:ALGM), Chesapeake Energy Corporation (NYSE:CHK), Landstar System, Inc. (NASDAQ:LSTR), Ardagh Group S.A. (NYSE:ARD), Blueprint Medicines Corporation (NASDAQ:BPMC), and Grupo Aeroportuario del Pacifico (NYSE:PAC). All of these stocks’ market caps resemble LITE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRI | 14 | 468979 | -6 |
| ALGM | 14 | 98566 | -3 |
| CHK | 44 | 2174878 | 1 |
| LSTR | 25 | 256357 | 9 |
| ARD | 14 | 154999 | 1 |
| BPMC | 34 | 910776 | -2 |
| PAC | 3 | 88302 | -4 |
| Average | 21.1 | 593265 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $593 million. That figure was $409 million in LITE’s case. Chesapeake Energy Corporation (NYSE:CHK) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Pacifico (NYSE:PAC) is the least popular one with only 3 bullish hedge fund positions. Lumentum Holdings Inc (NASDAQ:LITE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LITE is 69.2. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on LITE as the stock returned 21.5% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Lumentum Holdings Inc. (NASDAQ:LITE)
Follow Lumentum Holdings Inc. (NASDAQ:LITE)
Suggested Articles:
- 15 Largest Gaming Companies In The World
- 10 Best Summer Stocks to Buy Now
- Top 10 Stock Picks of Barry Ritholtz and Josh Brown
Disclosure: None. This article was originally published at Insider Monkey.
