In this article we will take a look at whether hedge funds think Lancaster Colony Corporation (NASDAQ:LANC) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Lancaster Colony Corporation (NASDAQ:LANC) the right pick for your portfolio? Prominent investors are taking a bullish view. The number of bullish hedge fund positions went up by 7 in recent months. Our calculations also showed that LANC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most stock holders, hedge funds are perceived as underperforming, old investment vehicles of years past. While there are greater than 8000 funds with their doors open at present, Our researchers look at the masters of this club, about 850 funds. It is estimated that this group of investors shepherd bulk of the smart money’s total asset base, and by paying attention to their best investments, Insider Monkey has unsheathed numerous investment strategies that have historically exceeded the broader indices. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Ken Fisher of Fisher Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s review the fresh hedge fund action surrounding Lancaster Colony Corporation (NASDAQ:LANC).
How are hedge funds trading Lancaster Colony Corporation (NASDAQ:LANC)?
At Q1’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 44% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in LANC over the last 18 quarters. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Lancaster Colony Corporation (NASDAQ:LANC), which was worth $90.9 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $41 million worth of shares. Citadel Investment Group, AQR Capital Management, and Intrinsic Edge Capital 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 SG Capital Management allocated the biggest weight to Lancaster Colony Corporation (NASDAQ:LANC), around 0.79% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, designating 0.72 percent of its 13F equity portfolio to LANC.
As one would reasonably expect, key hedge funds were breaking ground themselves. Intrinsic Edge Capital, managed by Mark Coe, assembled the most outsized position in Lancaster Colony Corporation (NASDAQ:LANC). Intrinsic Edge Capital had $5.4 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $4.6 million investment in the stock during the quarter. The following funds were also among the new LANC investors: Ken Grossman and Glen Schneider’s SG Capital Management, Paul Tudor Jones’s Tudor Investment Corp, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.
Let’s now review hedge fund activity in other stocks similar to Lancaster Colony Corporation (NASDAQ:LANC). These stocks are HollyFrontier Corporation (NYSE:HFC), Telecom Argentina S.A. (NYSE:TEO), Mercury Systems Inc (NASDAQ:MRCY), and RLI Corp. (NYSE:RLI). This group of stocks’ market valuations are closest to LANC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HFC | 24 | 203908 | -6 |
| TEO | 4 | 32332 | -1 |
| MRCY | 12 | 47030 | -12 |
| RLI | 15 | 192969 | -10 |
| Average | 13.75 | 119060 | -7.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $119 million. That figure was $180 million in LANC’s case. HollyFrontier Corporation (NYSE:HFC) is the most popular stock in this table. On the other hand Telecom Argentina S.A. (NYSE:TEO) is the least popular one with only 4 bullish hedge fund positions. Lancaster Colony Corporation (NASDAQ:LANC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but beat the market by 14.2 percentage points. Unfortunately LANC wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on LANC were disappointed as the stock returned 13.5% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Follow Lancaster Colony Corp (NASDAQ:LANC)
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Disclosure: None. This article was originally published at Insider Monkey.
