Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Lifelock Inc (NYSE:LOCK) shareholders have witnessed an increase in enthusiasm from smart money lately. LOCK was in 26 hedge funds’ portfolios at the end of September. There were 22 hedge funds in our database with LOCK positions at the end of the previous quarter. At the end of this article we will also compare LOCK to other stocks including HMS Holdings Corp. (NASDAQ:HMSY), Haemonetics Corporation (NYSE:HAE), and Globe Specialty Metals, Inc. (NASDAQ:GSM) to get a better sense of its popularity.
Follow Lifelock Inc. (NYSE:LOCK)
Follow Lifelock Inc. (NYSE:LOCK)
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 view the key action encompassing Lifelock Inc (NYSE:LOCK).
How are hedge funds trading Lifelock Inc (NYSE:LOCK)?
Heading into the fourth quarter of 2016, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, up 18% 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 increasing their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Paul Singer’s Elliott Management has the biggest position in Lifelock Inc (NYSE:LOCK), worth close to $131.1 million, corresponding to 1.1% of its total 13F portfolio. Sitting at the No. 2 spot is Nokota Management, run by Matthew Knauer and Mina Faltas, which holds a $53.5 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Remaining peers with similar optimism consist of Eric Chen’s Antipodean Advisors, Seymour Sy Kaufman and Michael Stark’s Crosslink Capital and Ken Griffin’s Citadel Investment Group.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the largest position in Lifelock Inc (NYSE:LOCK). According to its latest 13F filing, the fund had $10.1 million invested in the company at the end of the quarter. Guru Ramakrishnan’s Meru Capital also initiated a $5.7 million position during the quarter. The following funds were also among the new LOCK investors: Alex von Furstenberg and Mal Serure’s Arrow Capital Management, Steve Cohen’s Point72 Asset Management, and Robert I. Usdan and Wayne K. Goldstein’s Endicott Management.
Let’s check out hedge fund activity in other stocks similar to Lifelock Inc (NYSE:LOCK). We will take a look at HMS Holdings Corp. (NASDAQ:HMSY), Haemonetics Corporation (NYSE:HAE), Globe Specialty Metals, Inc. (NASDAQ:GSM), and Nelnet, Inc. (NYSE:NNI). This group of stocks’ market caps are closest to LOCK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HMSY | 19 | 98394 | 0 |
| HAE | 16 | 112860 | -1 |
| GSM | 17 | 236214 | -4 |
| NNI | 9 | 51977 | -6 |
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $343 million in LOCK’s case. HMS Holdings Corp. (NASDAQ:HMSY) is the most popular stock in this table. On the other hand Nelnet, Inc. (NYSE:NNI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Lifelock Inc (NYSE:LOCK) 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.
Disclosure: none.
