We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Luther Burbank Corporation (NASDAQ:LBC) based on that data.
Luther Burbank Corporation (NASDAQ:LBC) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 7 hedge funds’ portfolios at the end of the third quarter of 2019. 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 Voyager Therapeutics, Inc. (NASDAQ:VYGR), Keane Group, Inc. (NYSE:FRAC), and Midland States Bancorp, Inc. (NASDAQ:MSBI) to gather more data points. Our calculations also showed that LBC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Price of MFP Investors
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind we’re going to take a gander at the latest hedge fund action encompassing Luther Burbank Corporation (NASDAQ:LBC).
How have hedgies been trading Luther Burbank Corporation (NASDAQ:LBC)?
At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LBC over the last 17 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, MFP Investors was the largest shareholder of Luther Burbank Corporation (NASDAQ:LBC), with a stake worth $3.5 million reported as of the end of September. Trailing MFP Investors was Mendon Capital Advisors, which amassed a stake valued at $2.9 million. Renaissance Technologies, Millennium Management, and Winton 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 Mendon Capital Advisors allocated the biggest weight to Luther Burbank Corporation (NASDAQ:LBC), around 0.48% of its 13F portfolio. MFP Investors is also relatively very bullish on the stock, setting aside 0.48 percent of its 13F equity portfolio to LBC.
Because Luther Burbank Corporation (NASDAQ:LBC) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of hedge funds that elected to cut their full holdings heading into Q4. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace said goodbye to the largest position of the “upper crust” of funds monitored by Insider Monkey, comprising about $0.3 million in stock, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital was right behind this move, as the fund dropped about $0 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to Luther Burbank Corporation (NASDAQ:LBC). These stocks are Voyager Therapeutics, Inc. (NASDAQ:VYGR), Keane Group, Inc. (NYSE:FRAC), Midland States Bancorp, Inc. (NASDAQ:MSBI), and Sabine Royalty Trust (NYSE:SBR). This group of stocks’ market caps are similar to LBC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VYGR | 16 | 107789 | -2 |
| FRAC | 23 | 346467 | 2 |
| MSBI | 7 | 5828 | 1 |
| SBR | 6 | 22874 | -1 |
| Average | 13 | 120740 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $10 million in LBC’s case. Keane Group, Inc. (NYSE:FRAC) is the most popular stock in this table. On the other hand Sabine Royalty Trust (NYSE:SBR) is the least popular one with only 6 bullish hedge fund positions. Luther Burbank Corporation (NASDAQ:LBC) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately LBC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); LBC investors were disappointed as the stock returned 2.5% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
