Do Hedge Funds Love LivePerson, Inc. (LPSN)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of LivePerson, Inc. (NASDAQ:LPSN) based on that data.

Is LivePerson, Inc. (NASDAQ:LPSN) going to take off soon? The best stock pickers were cutting their exposure. The number of long hedge fund bets dropped by 1 recently. LivePerson, Inc. (NASDAQ:LPSN) was in 26 hedge funds’ portfolios at the end of September. The all time high for this statistic is 35. Our calculations also showed that LPSN 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. Keeping this in mind let’s review the new hedge fund action surrounding LivePerson, Inc. (NASDAQ:LPSN).

Cathie Wood of ARK Investment Management

Do Hedge Funds Think LPSN Is A Good Stock To Buy Now?

At Q3’s end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the previous quarter. On the other hand, there were a total of 26 hedge funds with a bullish position in LPSN a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

The largest stake in LivePerson, Inc. (NASDAQ:LPSN) was held by Polar Capital, which reported holding $71.6 million worth of stock at the end of September. It was followed by ARK Investment Management with a $56 million position. Other investors bullish on the company included Two Sigma Advisors, Portolan Capital Management, and Melqart Asset Management. In terms of the portfolio weights assigned to each position Venator Capital Management allocated the biggest weight to LivePerson, Inc. (NASDAQ:LPSN), around 3.37% of its 13F portfolio. Collaborative Holdings Management is also relatively very bullish on the stock, earmarking 2.43 percent of its 13F equity portfolio to LPSN.

Judging by the fact that LivePerson, Inc. (NASDAQ:LPSN) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there exists a select few funds that decided to sell off their positions entirely in the third quarter. It’s worth mentioning that Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund said goodbye to the largest position of the 750 funds watched by Insider Monkey, totaling about $14.2 million in stock, and Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital was right behind this move, as the fund dumped about $8.4 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 1 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks similar to LivePerson, Inc. (NASDAQ:LPSN). These stocks are CI Financial Corp (NYSE:CIXX), Hancock Whitney Corporation (NASDAQ:HWC), ReNew Energy Global plc (NASDAQ:RNW), Diodes Incorporated (NASDAQ:DIOD), Univar Solutions Inc (NYSE:UNVR), Sonos, Inc. (NASDAQ:SONO), and Spectrum Brands Holdings, Inc. (NYSE:SPB). All of these stocks’ market caps resemble LPSN’s market cap.

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As you can see these stocks had an average of 26.7 hedge funds with bullish positions and the average amount invested in these stocks was $386 million. That figure was $226 million in LPSN’s case. Sonos, Inc. (NASDAQ:SONO) is the most popular stock in this table. On the other hand CI Financial Corp (NYSE:CIXX) is the least popular one with only 13 bullish hedge fund positions. LivePerson, Inc. (NASDAQ:LPSN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LPSN is 44.3. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately LPSN wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); LPSN investors were disappointed as the stock returned -37.1% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.