Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Lazard Ltd (NYSE:LAZ) investors should pay attention to a decrease in enthusiasm from smart money in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as OGE Energy Corp. (NYSE:OGE), 58.com Inc (ADR) (NYSE:WUBA), and Spectrum Brands Holdings, Inc. (NYSE:SPB) to gather more data points.
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With all of this in mind, we’re going to take a look at the recent action surrounding Lazard Ltd (NYSE:LAZ).
What have hedge funds been doing with Lazard Ltd (NYSE:LAZ)?
At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the second quarter. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ken Heebner’s Capital Growth Management has the largest position in Lazard Ltd (NYSE:LAZ), worth close to $64.1 million, comprising 2.1% of its total 13F portfolio. Sitting at the No. 2 spot is Marshall Wace LLP, led by Paul Marshall and Ian Wace, holding a $63.8 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish encompass Ken Fisher’s Fisher Asset Management, Brian Ashford-Russell and Tim Woolley’s Polar Capital and Chuck Royce’s Royce & Associates.
Judging by the fact that Lazard Ltd (NYSE:LAZ) has faced declining sentiment from hedge fund managers, it’s easy to see that there exists a select few money managers who sold off their entire stakes in the third quarter. Interestingly, Andrew Sandler’s Sandler Capital Management dropped the largest investment of all the hedgies followed by Insider Monkey, valued at close to $13.5 million in stock, and Michael Messner’s Seminole Capital (Investment Mgmt) was right behind this move, as the fund said goodbye to about $1.2 million worth. These transactions are important to note, as total hedge fund interest dropped by 1 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Lazard Ltd (NYSE:LAZ). These stocks are OGE Energy Corp. (NYSE:OGE), 58.com Inc (ADR) (NYSE:WUBA), Spectrum Brands Holdings, Inc. (NYSE:SPB), and Range Resources Corp. (NYSE:RRC). This group of stocks’ market values are similar to LAZ’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OGE | 22 | 233394 | 7 |
| WUBA | 28 | 502045 | 4 |
| SPB | 25 | 546965 | -4 |
| RRC | 31 | 744711 | -11 |
As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $507 million. That figure was $562 million in LAZ’s case. Range Resources Corp. (NYSE:RRC) is the most popular stock in this table. On the other hand OGE Energy Corp. (NYSE:OGE) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Lazard Ltd (NYSE:LAZ) is as less popular as OGE. 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.
