Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards LTC Properties Inc (NYSE:LTC).
LTC Properties Inc (NYSE:LTC) investors should be aware of an increase in activity from the world’s largest hedge funds lately. LTC Properties Inc (NYSE:LTC) was in 10 hedge funds’ portfolios at the end of June. The all time high for this statistic is 15. There were 7 hedge funds in our database with LTC positions at the end of the first quarter. Our calculations also showed that LTC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Bruce Kovner of Caxton Associates LP
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s check out the latest hedge fund action encompassing LTC Properties Inc (NYSE:LTC).
Do Hedge Funds Think LTC Is A Good Stock To Buy Now?
At second quarter’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 43% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LTC over the last 24 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in LTC Properties Inc (NYSE:LTC), which was worth $2.1 million at the end of the second quarter. On the second spot was GLG Partners which amassed $2 million worth of shares. Tudor Investment Corp, Citadel Investment Group, and Balyasny Asset 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 Quantinno Capital allocated the biggest weight to LTC Properties Inc (NYSE:LTC), around 0.34% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, earmarking 0.04 percent of its 13F equity portfolio to LTC.
As aggregate interest increased, some big names were leading the bulls’ herd. Tudor Investment Corp, managed by Paul Tudor Jones, initiated the biggest position in LTC Properties Inc (NYSE:LTC). Tudor Investment Corp had $1.9 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $0.9 million investment in the stock during the quarter. The other funds with brand new LTC positions are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors and Bruce Kovner’s Caxton Associates LP.
Let’s go over hedge fund activity in other stocks similar to LTC Properties Inc (NYSE:LTC). We will take a look at Ichor Holdings Ltd. (NASDAQ:ICHR), Krystal Biotech, Inc. (NASDAQ:KRYS), AMTD International Inc. (NYSE:HKIB), PLBY Group, Inc. (NASDAQ:PLBY), U.S. Physical Therapy, Inc. (NYSE:USPH), Alphatec Holdings Inc (NASDAQ:ATEC), and Bonanza Creek Energy Inc (NYSE:BCEI). This group of stocks’ market valuations are closest to LTC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ICHR | 20 | 88964 | 8 |
| KRYS | 9 | 275447 | 1 |
| HKIB | 1 | 7086 | -1 |
| PLBY | 20 | 136557 | 7 |
| USPH | 15 | 32752 | 1 |
| ATEC | 18 | 174261 | 0 |
| BCEI | 21 | 110396 | 2 |
| Average | 14.9 | 117923 | 2.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.9 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $9 million in LTC’s case. Bonanza Creek Energy Inc (NYSE:BCEI) is the most popular stock in this table. On the other hand AMTD International Inc. (NYSE:HKIB) is the least popular one with only 1 bullish hedge fund positions. LTC Properties Inc (NYSE:LTC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LTC is 50.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately LTC wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); LTC investors were disappointed as the stock returned -15.3% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
