The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Life Storage, Inc. (NYSE:LSI).
Life Storage, Inc. (NYSE:LSI) has seen a decrease in enthusiasm from smart money recently. Life Storage, Inc. (NYSE:LSI) was in 21 hedge funds’ portfolios at the end of June. The all time high for this statistic is 26. There were 26 hedge funds in our database with LSI positions at the end of the first quarter. Our calculations also showed that LSI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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 go over the key hedge fund action encompassing Life Storage, Inc. (NYSE:LSI).
Do Hedge Funds Think LSI Is A Good Stock To Buy Now?
At the end of June, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in LSI over the last 24 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Millennium Management was the largest shareholder of Life Storage, Inc. (NYSE:LSI), with a stake worth $58.4 million reported as of the end of June. Trailing Millennium Management was Waterfront Capital Partners, which amassed a stake valued at $36.2 million. Capital Growth Management, Citadel Investment Group, and Balyasny Asset 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 Waterfront Capital Partners allocated the biggest weight to Life Storage, Inc. (NYSE:LSI), around 2.72% of its 13F portfolio. Capital Growth Management is also relatively very bullish on the stock, dishing out 2.71 percent of its 13F equity portfolio to LSI.
Because Life Storage, Inc. (NYSE:LSI) has witnessed a decline in interest from the smart money, it’s easy to see that there is a sect of money managers that decided to sell off their full holdings in the second quarter. Interestingly, Ken Fisher’s Fisher Asset Management dropped the biggest investment of the 750 funds watched by Insider Monkey, comprising about $8.5 million in stock, and Renaissance Technologies was right behind this move, as the fund dropped about $5.6 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 5 funds in the second quarter.
Let’s go over hedge fund activity in other stocks similar to Life Storage, Inc. (NYSE:LSI). These stocks are Mirati Therapeutics, Inc. (NASDAQ:MRTX), TELUS International (Cda) Inc. (NYSE:TIXT), Concentrix Corporation (NASDAQ:CNXC), National Retail Properties, Inc. (NYSE:NNN), Ovintiv Inc. (NYSE:OVV), Plains All American Pipeline, L.P. (NYSE:PAA), and Apache Corporation (NYSE:APA). This group of stocks’ market valuations resemble LSI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MRTX | 55 | 2790783 | -2 |
| TIXT | 6 | 19229 | -4 |
| CNXC | 21 | 601344 | -2 |
| NNN | 19 | 188064 | -3 |
| OVV | 40 | 739285 | 10 |
| PAA | 7 | 65969 | 0 |
| APA | 37 | 619470 | -5 |
| Average | 26.4 | 717735 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $718 million. That figure was $262 million in LSI’s case. Mirati Therapeutics, Inc. (NASDAQ:MRTX) is the most popular stock in this table. On the other hand TELUS International (Cda) Inc. (NYSE:TIXT) is the least popular one with only 6 bullish hedge fund positions. Life Storage, Inc. (NYSE:LSI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LSI is 39.5. 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% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on LSI as the stock returned 20.9% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
