Hedge Funds Are Crazy About LSI Industries, Inc. (LYTS)

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was LSI Industries, Inc. (NASDAQ:LYTS).

Is LSI Industries, Inc. an exceptional investment now? The stock has surged by 60% since the beginning of 2015 and prominent investors are taking a bullish view. The number of bullish hedge fund positions increased by 3 recently. However, 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 Sequenom, Inc. (NASDAQ:SQNM), Charter Financial Corp (NASDAQ:CHFN), and BHennessy Capital Acquisition Corp (NASDAQ:BLBD) to gather more data points.

If you’d ask most traders, hedge funds are perceived as unimportant, old financial tools of the past. While there are greater than 8000 funds with their doors open at present, Our experts choose to focus on the moguls of this group, about 700 funds. These hedge fund managers command the lion’s share of all hedge funds’ total capital, and by keeping an eye on their inimitable stock picks, Insider Monkey has identified a few investment strategies that have historically outrun Mr. Market. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Keeping this in mind, we’re going to go over the latest action regarding LSI Industries, Inc. (NASDAQ:LYTS).

How are hedge funds trading LSI Industries, Inc. (NASDAQ:LYTS)?

Heading into Q4, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 43% from one quarter earlier. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the biggest position in LSI Industries, Inc. (NASDAQ:LYTS), worth close to $19.1 million, amounting to 0.1% of its total 13F portfolio. The second most bullish fund manager is SG Capital Management, managed by Ken Grossman and Glen Schneider, which holds a $5.3 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Other peers that hold long positions consist of Jim Simons’ Renaissance Technologies, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors and John Overdeck, and David Siegel’s Two Sigma Advisors.

With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Algert Coldiron Investors created the biggest position in LSI Industries, Inc. (NASDAQ:LYTS), having $1.2 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also initiated a $0.2 million position during the quarter. The only other fund with a brand new LYTS position is Ken Griffin’s Citadel Investment Group.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as LSI Industries, Inc. (NASDAQ:LYTS) but similarly valued. We will take a look at Sequenom, Inc. (NASDAQ:SQNM), Charter Financial Corp (NASDAQ:CHFN), Hennessy Capital Acquisition Corp (NASDAQ:BLBD), and Tribune Publishing Co (NYSE:TPUB). This group of stocks’ market values match LYTS’s market value.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $28 million in LYTS’s case. Sequenom, Inc. (NASDAQ:SQNM) is the most popular stock in this table. On the other hand Hennessy Capital Acquisition Corp (NASDAQ:BLBD) is the least popular one with only 7 bullish hedge fund positions. LSI Industries, Inc. (NASDAQ:LYTS) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SQNM might be a better candidate to consider a long position.