Do Hedge Funds Love Lakeland Financial Corporation (LKFN)?

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Lakeland Financial Corporation (NASDAQ:LKFN) investors should pay attention to an increase in enthusiasm from smart money recently. There were 6 hedge funds in our database with LKFN holdings at the end of the previous quarter. At the end of this article we will also compare LKFN to other stocks including Shenandoah Telecommunications Company (NASDAQ:SHEN), Petrobras Argentina SA ADR (NYSE:PZE), and Barracuda Networks Inc (NYSE:CUDA) to get a better sense of its popularity.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

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Now, we’re going to go over the latest action encompassing Lakeland Financial Corporation (NASDAQ:LKFN).

How have hedgies been trading Lakeland Financial Corporation (NASDAQ:LKFN)?

At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards LKFN over the last 5 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey,one of the largest hedge funds in the world, Renaissance Technologies has the biggest position in Lakeland Financial Corporation (NASDAQ:LKFN), worth close to $3.1 million, comprising less than 0.1% of its total 13F portfolio. The second most bullish fund manager is AQR Capital Management, led by Cliff Asness, holding a $1.7 million position; less than 0.1% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism encompass D E Shaw and Peter Muller’s PDT Partners. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As one would reasonably expect, key money managers were breaking ground themselves. Two Sigma Advisors, led by John Overdeck and David Siegel, established the largest position in Lakeland Financial Corporation (NASDAQ:LKFN). Two Sigma Advisors had $0.8 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.3 million investment in the stock during the quarter. The only other fund with a new position in the stock is Mike Vranos’s Ellington.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Lakeland Financial Corporation (NASDAQ:LKFN) but similarly valued. We will take a look at Shenandoah Telecommunications Company (NASDAQ:SHEN), Petrobras Argentina SA ADR (NYSE:PZE), Barracuda Networks Inc (NYSE:CUDA), and The E.W. Scripps Company (NYSE:SSP). This group of stocks’ market valuations are similar to LKFN’s market valuation.

As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $8 million in LKFN’s case. Barracuda Networks Inc (NYSE:CUDA) is the most popular stock in this table. On the other hand Petrobras Argentina SA ADR (NYSE:PZE) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Lakeland Financial Corporation (NASDAQ:LKFN) is as less popular than PZE. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.