Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility and underperformance. The time period between the end of June 2015 and the end of June 2016 was one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have been underperforming the large-cap indices. However, things have dramatically changed over the last 5 months. Small-cap stocks reversed their misfortune and beat the large cap indices by almost 11 percentage points since the end of June. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Liberty Broadband Corp (NASDAQ:LBRDA).
Is Liberty Broadband Corp (NASDAQ:LBRDA) the right investment to pursue these days? Investors who are in the know are getting more bullish. The number of bullish hedge fund positions inched up by 1 recently. 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 Spirit Realty Capital Inc (NYSE:SRC), Companhia de Saneamento Basico (ADR) (NYSE:SBS), and Trimble Navigation Limited (NASDAQ:TRMB) to gather more data points.
Follow Liberty Broadband Corp (NASDAQ:LBRDA)
Follow Liberty Broadband Corp (NASDAQ:LBRDA)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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With all of this in mind, we’re going to take a gander at the new action encompassing Liberty Broadband Corp (NASDAQ:LBRDA).
What have hedge funds been doing with Liberty Broadband Corp (NASDAQ:LBRDA)?
At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the second quarter of 2016. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the biggest position in Liberty Broadband Corp (NASDAQ:LBRDA). D E Shaw has a $73 million position in the stock. On D E Shaw’s heels is Ashe Capital, managed by William Crowley, William Harker, and Stephen Blass, which holds a $48.9 million position; 5.1% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism consist of Bob Peck and Andy Raab’s FPR Partners, Richard McGuire’s Marcato Capital Management and Roberto Mignone’s Bridger Management.
As one would reasonably expect, key money managers have jumped into Liberty Broadband Corp (NASDAQ:LBRDA) headfirst. Cheyne Capital, managed by Jonathan Lourie and Stuart Fiertz, established the most valuable position in Liberty Broadband Corp (NASDAQ:LBRDA). Cheyne Capital had $5.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $2.3 million position during the quarter. The following funds were also among the new LBRDA investors: Ian Cumming and Joseph Steinberg’s Leucadia National, Bart Baum’s Ionic Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s go over hedge fund activity in other stocks similar to Liberty Broadband Corp (NASDAQ:LBRDA). These stocks are Spirit Realty Capital Inc (NYSE:SRC), Companhia de Saneamento Basico (ADR) (NYSE:SBS), Trimble Navigation Limited (NASDAQ:TRMB), and Kilroy Realty Corp (NYSE:KRC). This group of stocks’ market valuations are similar to LBRDA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SRC | 17 | 340235 | -3 |
| SBS | 16 | 206265 | 0 |
| TRMB | 19 | 531380 | 1 |
| KRC | 13 | 213436 | 4 |
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 $323 million. That figure was $400 million in LBRDA’s case. Trimble Navigation Limited (NASDAQ:TRMB) is the most popular stock in this table. On the other hand Kilroy Realty Corp (NYSE:KRC) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Liberty Broadband Corp (NASDAQ:LBRDA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
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