The fourth quarter was a rough one for most investors, as fears of a rising interest rate environment in the U.S, a trade war with China, and a more or less stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards LegacyTexas Financial Group Inc (NASDAQ:LTXB), and what that likely means for the prospects of the company and its stock.
LegacyTexas Financial Group Inc (NASDAQ:LTXB) shareholders have witnessed an increase in enthusiasm from smart money in recent months. Our calculations also showed that ltxb isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to go over the new hedge fund action encompassing LegacyTexas Financial Group Inc (NASDAQ:LTXB).
What have hedge funds been doing with LegacyTexas Financial Group Inc (NASDAQ:LTXB)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the previous quarter. By comparison, 7 hedge funds held shares or bullish call options in LTXB heading into this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Impax Asset Management held the most valuable stake in LegacyTexas Financial Group Inc (NASDAQ:LTXB), which was worth $18.3 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $17.8 million worth of shares. Moreover, Elizabeth Park Capital Management, Millennium Management, and Ascend Capital were also bullish on LegacyTexas Financial Group Inc (NASDAQ:LTXB), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, some big names have jumped into LegacyTexas Financial Group Inc (NASDAQ:LTXB) headfirst. Impax Asset Management, managed by Ian Simm, assembled the largest position in LegacyTexas Financial Group Inc (NASDAQ:LTXB). Impax Asset Management had $18.3 million invested in the company at the end of the quarter. Malcolm Fairbairn’s Ascend Capital also initiated a $3.6 million position during the quarter. The following funds were also among the new LTXB investors: George Soros’s Soros Fund Management, Paul Tudor Jones’s Tudor Investment Corp, and Frederick DiSanto’s Ancora Advisors.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as LegacyTexas Financial Group Inc (NASDAQ:LTXB) but similarly valued. These stocks are Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA), The Navigators Group, Inc (NASDAQ:NAVG), Acushnet Holdings Corp. (NYSE:GOLF), and Allegiant Travel Company (NASDAQ:ALGT). All of these stocks’ market caps match LTXB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MNTA | 18 | 300848 | 1 |
| NAVG | 17 | 193595 | 5 |
| GOLF | 14 | 39395 | 6 |
| ALGT | 15 | 428697 | 0 |
| Average | 16 | 240634 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $241 million. That figure was $71 million in LTXB’s case. Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA) is the most popular stock in this table. On the other hand Acushnet Holdings Corp. (NYSE:GOLF) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks LegacyTexas Financial Group Inc (NASDAQ:LTXB) is even less popular than GOLF. 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.
Disclosure: None. This article was originally published at Insider Monkey.
