Hedge Funds Are Dumping LPL Financial Holdings Inc (LPLA)

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards LPL Financial Holdings Inc (NASDAQ:LPLA).

Is LPL Financial Holdings Inc (NASDAQ:LPLA) undervalued? Investors who are in the know were getting less optimistic. The number of bullish hedge fund bets were cut by 11 in recent months. LPL Financial Holdings Inc (NASDAQ:LPLA) was in 37 hedge funds’ portfolios at the end of September. The all time high for this statistic is 48. Our calculations also showed that LPLA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now we’re going to take a look at the latest hedge fund action encompassing LPL Financial Holdings Inc (NASDAQ:LPLA).

Robert Pohly of Samlyn Capital

Do Hedge Funds Think LPLA Is A Good Stock To Buy Now?

At Q3’s end, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LPLA over the last 25 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Samlyn Capital, managed by Robert Pohly, holds the biggest position in LPL Financial Holdings Inc (NASDAQ:LPLA). Samlyn Capital has a $407.7 million position in the stock, comprising 5.5% of its 13F portfolio. The second most bullish fund manager is John Smith Clark of Southpoint Capital Advisors, with a $235.1 million position; 5% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism encompass Parag Vora’s HG Vora Capital Management, James Parsons’s Junto Capital Management and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Engle Capital allocated the biggest weight to LPL Financial Holdings Inc (NASDAQ:LPLA), around 14.54% of its 13F portfolio. Samlyn Capital is also relatively very bullish on the stock, designating 5.46 percent of its 13F equity portfolio to LPLA.

Because LPL Financial Holdings Inc (NASDAQ:LPLA) has faced a decline in interest from the aggregate hedge fund industry, we can see that there was a specific group of fund managers that elected to cut their full holdings in the third quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management cut the biggest stake of all the hedgies tracked by Insider Monkey, totaling about $52.1 million in call options. Ira Unschuld’s fund, Brant Point Investment Management, also dumped its call options, about $9.4 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 11 funds in the third quarter.

Let’s check out hedge fund activity in other stocks similar to LPL Financial Holdings Inc (NASDAQ:LPLA). We will take a look at Jones Lang LaSalle Inc (NYSE:JLL), Iron Mountain Incorporated (NYSE:IRM), Enel Americas S.A. (NYSE:ENIA), Tenaris S.A. (NYSE:TS), Opendoor Technologies Inc. (NASDAQ:OPEN), Fortune Brands Home & Security Inc (NYSE:FBHS), and American Homes 4 Rent (NYSE:AMH). All of these stocks’ market caps match LPLA’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.6 hedge funds with bullish positions and the average amount invested in these stocks was $752 million. That figure was $1690 million in LPLA’s case. Opendoor Technologies Inc. (NASDAQ:OPEN) is the most popular stock in this table. On the other hand Enel Americas S.A. (NYSE:ENIA) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks LPL Financial Holdings Inc (NASDAQ:LPLA) is more popular among hedge funds. Our overall hedge fund sentiment score for LPLA is 67.1. 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. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately LPLA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LPLA were disappointed as the stock returned 0.7% since the end of the third quarter (through 11/30) 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 since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.