At Insider Monkey, we pore over the filings of nearly 867 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30th. In this article, we will use that wealth of knowledge to determine whether or not LendingClub Corp (NYSE:LC) makes for a good investment right now.
LendingClub Corp (NYSE:LC) was in 25 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. LC investors should be aware of an increase in support from the world’s most elite money managers recently. There were 23 hedge funds in our database with LC positions at the end of the second quarter. Our calculations also showed that LC 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. With all of this in mind let’s take a glance at the new hedge fund action surrounding LendingClub Corp (NYSE:LC).
Matthew Lindenbaum of Basswood Capital
Do Hedge Funds Think LC Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in LC over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, ARK Investment Management was the largest shareholder of LendingClub Corp (NYSE:LC), with a stake worth $81.6 million reported as of the end of September. Trailing ARK Investment Management was Basswood Capital, which amassed a stake valued at $56.1 million. D E Shaw, Two Sigma Advisors, and Arrowstreet Capital 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 No Street Capital allocated the biggest weight to LendingClub Corp (NYSE:LC), around 4.61% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, earmarking 2.27 percent of its 13F equity portfolio to LC.
Consequently, key money managers have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, created the most valuable position in LendingClub Corp (NYSE:LC). Point72 Asset Management had $20.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $10.4 million position during the quarter. The other funds with new positions in the stock are Michael Gelband’s ExodusPoint Capital, Donald Sussman’s Paloma Partners, and Mika Toikka’s AlphaCrest Capital Management.
Let’s also examine hedge fund activity in other stocks similar to LendingClub Corp (NYSE:LC). We will take a look at Commscope Holding Company Inc (NASDAQ:COMM), Cardlytics, Inc. (NASDAQ:CDLX), ACV Auctions Inc. (NASDAQ:ACVA), Retail Properties of America Inc (NYSE:RPAI), Cannae Holdings, Inc. (NYSE:CNNE), United States Cellular Corporation (NYSE:USM), and Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS). All of these stocks’ market caps are closest to LC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| COMM | 37 | 681641 | 1 |
| CDLX | 23 | 830080 | -6 |
| ACVA | 22 | 230648 | 0 |
| RPAI | 11 | 61780 | -5 |
| CNNE | 35 | 446118 | 1 |
| USM | 9 | 72313 | 1 |
| KTOS | 15 | 232817 | -3 |
| Average | 21.7 | 365057 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $365 million. That figure was $437 million in LC’s case. Commscope Holding Company Inc (NASDAQ:COMM) is the most popular stock in this table. On the other hand United States Cellular Corporation (NYSE:USM) is the least popular one with only 9 bullish hedge fund positions. LendingClub Corp (NYSE:LC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LC is 65.6. 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 positive signal but 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately LC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LC were disappointed as the stock returned 7.7% since the end of September (through 12/9) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
