“Market volatility has picked up again over the past few weeks. Headlines highlight risks regarding interest rates, the Fed, China, house prices, auto sales, trade wars, and more. Uncertainty abounds. But doesn’t it always? I have no view on whether the recent volatility will continue for a while, or whether the market will be back at all-time highs before we know it. I remain focused on preserving and growing our capital, and continue to believe that the best way to do so is via a value-driven, concentrated, patient approach. I shun consensus holdings, rich valuations, and market fads, in favor of solid, yet frequently off-the-beaten-path, businesses run by excellent, aligned management teams, purchased at deep discounts to intrinsic value,” are the words of Maran Capital’s Dan Roller. His stock picks have been beating the S&P 500 Index handily. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards Lakeland Financial Corporation (NASDAQ:LKFN) and see how it was affected.
Lakeland Financial Corporation (NASDAQ:LKFN) shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. Our calculations also showed that lkfn isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to take a glance at the key hedge fund action encompassing Lakeland Financial Corporation (NASDAQ:LKFN).
How have hedgies been trading Lakeland Financial Corporation (NASDAQ:LKFN)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LKFN over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the biggest position in Lakeland Financial Corporation (NASDAQ:LKFN). Renaissance Technologies has a $8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Millennium Management, led by Israel Englander, holding a $7.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions encompass Ken Griffin’s Citadel Investment Group, Paul Marshall and Ian Wace’s Marshall Wace LLP and John Overdeck and David Siegel’s Two Sigma Advisors.
Now, key money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the largest position in Lakeland Financial Corporation (NASDAQ:LKFN). Marshall Wace LLP had $3.1 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0.5 million position during the quarter. The other funds with brand new LKFN positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Brandon Haley’s Holocene Advisors.
Let’s check out hedge fund activity in other stocks similar to Lakeland Financial Corporation (NASDAQ:LKFN). We will take a look at The Marcus Corporation (NYSE:MCS), Omeros Corporation (NASDAQ:OMER), Radware Ltd. (NASDAQ:RDWR), and Revlon Inc (NYSE:REV). This group of stocks’ market values resemble LKFN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MCS | 13 | 80782 | 4 |
| OMER | 8 | 74551 | 1 |
| RDWR | 16 | 320904 | 1 |
| REV | 26 | 196503 | 6 |
| Average | 15.75 | 168185 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $168 million. That figure was $31 million in LKFN’s case. Revlon Inc (NYSE:REV) is the most popular stock in this table. On the other hand Omeros Corporation (NASDAQ:OMER) is the least popular one with only 8 bullish hedge fund positions. Lakeland Financial Corporation (NASDAQ:LKFN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard REV might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
