Hedge Funds Are Nibbling On Lennox International Inc. (LII)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 873 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article we look at what those investors think of Lennox International Inc. (NYSE:LII).

Lennox International Inc. (NYSE:LII) was in 26 hedge funds’ portfolios at the end of June. The all time high for this statistic is 34. LII has seen an increase in activity from the world’s largest hedge funds of late. There were 25 hedge funds in our database with LII positions at the end of the first quarter. Our calculations also showed that LII isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny of Balyasny Asset Management

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. With all of this in mind let’s take a peek at the latest hedge fund action regarding Lennox International Inc. (NYSE:LII).

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

At Q2’s end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the first quarter of 2020. On the other hand, there were a total of 24 hedge funds with a bullish position in LII a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Impax Asset Management held the most valuable stake in Lennox International Inc. (NYSE:LII), which was worth $155.6 million at the end of the second quarter. On the second spot was Balyasny Asset Management which amassed $69.5 million worth of shares. Arrowstreet Capital, AQR Capital Management, and GLG Partners 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 Bishop Rock Capital allocated the biggest weight to Lennox International Inc. (NYSE:LII), around 3.39% of its 13F portfolio. Sandler Capital Management is also relatively very bullish on the stock, setting aside 2.02 percent of its 13F equity portfolio to LII.

Now, key hedge funds have jumped into Lennox International Inc. (NYSE:LII) headfirst. D E Shaw, managed by D. E. Shaw, established the most valuable call position in Lennox International Inc. (NYSE:LII). D E Shaw had $7 million invested in the company at the end of the quarter. Gregg Moskowitz’s Interval Partners also initiated a $6.9 million position during the quarter. The other funds with brand new LII positions are Peter Avellone’s Cartenna Capital, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Alexander Mitchell’s Scopus Asset Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Lennox International Inc. (NYSE:LII) but similarly valued. These stocks are W.R. Berkley Corporation (NYSE:WRB), Vedanta Ltd (NYSE:VEDL), Equitable Holdings, Inc. (NYSE:EQH), Hasbro, Inc. (NASDAQ:HAS), Camden Property Trust (NYSE:CPT), Athene Holding Ltd. (NYSE:ATH), and Tenaris S.A. (NYSE:TS). All of these stocks’ market caps resemble LII’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $718 million. That figure was $466 million in LII’s case. Equitable Holdings, Inc. (NYSE:EQH) is the most popular stock in this table. On the other hand Vedanta Ltd (NYSE:VEDL) is the least popular one with only 10 bullish hedge fund positions. Lennox International Inc. (NYSE:LII) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LII is 51.8. 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 24.9% in 2021 through October 15th and surpassed the market again by 4.5 percentage points. Unfortunately LII wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); LII investors were disappointed as the stock returned -11.6% since the end of June (through 10/15) 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.