In this article you are going to find out whether hedge funds think Livent Corporation (NYSE:LTHM) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Livent Corporation (NYSE:LTHM) a buy right now? Investors who are in the know were turning bullish. The number of long hedge fund bets moved up by 5 recently. Livent Corporation (NYSE:LTHM) was in 27 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 25. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that LTHM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Chuck Royce of Royce & Associates
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 look at the fresh hedge fund action encompassing Livent Corporation (NYSE:LTHM).
Do Hedge Funds Think LTHM Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23% from the previous quarter. By comparison, 19 hedge funds held shares or bullish call options in LTHM a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Joho Capital was the largest shareholder of Livent Corporation (NYSE:LTHM), with a stake worth $73.1 million reported as of the end of June. Trailing Joho Capital was Citadel Investment Group, which amassed a stake valued at $46.5 million. Royce & Associates, Renaissance Technologies, and Axel Capital Management 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 Joho Capital allocated the biggest weight to Livent Corporation (NYSE:LTHM), around 10.39% of its 13F portfolio. Axel Capital Management is also relatively very bullish on the stock, designating 8.54 percent of its 13F equity portfolio to LTHM.
As aggregate interest increased, specific money managers have jumped into Livent Corporation (NYSE:LTHM) headfirst. Pinz Capital, managed by Matthew L Pinz, initiated the biggest position in Livent Corporation (NYSE:LTHM). Pinz Capital had $9 million invested in the company at the end of the quarter. John M. Angelo and Michael L. Gordon’s Angelo Gordon & Co also initiated a $8.8 million position during the quarter. The other funds with brand new LTHM positions are Frank Fu’s CaaS Capital, Crispin Odey’s Odey Asset Management Group, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Livent Corporation (NYSE:LTHM) but similarly valued. We will take a look at American Equity Investment Life Holding Company (NYSE:AEL), Burning Rock Biotech Limited (NASDAQ:BNR), National Health Investors Inc (NYSE:NHI), CarGurus, Inc. (NASDAQ:CARG), Corsair Gaming, Inc. (NASDAQ:CRSR), Momentive Global Inc (NASDAQ:MNTV), and 8×8, Inc. (NASDAQ:EGHT). This group of stocks’ market caps resemble LTHM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AEL | 20 | 187474 | -4 |
| BNR | 9 | 81726 | -2 |
| NHI | 13 | 45554 | 2 |
| CARG | 23 | 241921 | -6 |
| CRSR | 14 | 42455 | 5 |
| MNTV | 28 | 238702 | -4 |
| EGHT | 29 | 928021 | 5 |
| Average | 19.4 | 252265 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $252 million. That figure was $251 million in LTHM’s case. 8×8, Inc. (NASDAQ:EGHT) is the most popular stock in this table. On the other hand Burning Rock Biotech Limited (NASDAQ:BNR) is the least popular one with only 9 bullish hedge fund positions. Livent Corporation (NYSE:LTHM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LTHM is 85. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on LTHM as the stock returned 36.9% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Livent Corp. (NYSE:LTHM)
Follow Livent Corp. (NYSE:LTHM)
Suggested Articles:
- 20 Short Dating Profile Examples for Males
- 10 Best Drone Stocks to Invest In
- 15 Best Momentum Stocks to Buy Now
Disclosure: None. This article was originally published at Insider Monkey.
