Is Lions Gate Entertainment Corp. (USA) (NYSE:LGF) a splendid investment right now? Investors who are in the know are becoming less confident. The number of long hedge fund positions retreated by 3 lately. Interestingly, today, the stock is rising on unusual volume, about 50% above average. On the whole, LGF is up about 3.24% since Mr. Market’s open. So why should we pay attention to the smart money?
In the eyes of most traders, hedge funds are assumed to be slow, outdated financial tools of yesteryear. While there are more than 8000 funds trading today, we choose to focus on the upper echelon of this club, around 450 funds. Most estimates calculate that this group has its hands on the majority of all hedge funds’ total asset base, and by monitoring their best stock picks, we have found a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Just as important, positive insider trading activity is another way to break down the investments you’re interested in. There are lots of incentives for an upper level exec to cut shares of his or her company, but only one, very simple reason why they would buy. Many empirical studies have demonstrated the market-beating potential of this method if piggybackers understand what to do (learn more here).
With these “truths” under our belt, let’s take a glance at the key action encompassing Lions Gate Entertainment Corp. (USA) (NYSE:LGF).
What have hedge funds been doing with Lions Gate Entertainment Corp. (USA) (NYSE:LGF)?
Heading into 2013, a total of 15 of the hedge funds we track were long in this stock, a change of -17% from the third quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially.
When looking at the hedgies we track, Alydar Capital, managed by John Murphy, holds the largest position in Lions Gate Entertainment Corp. (USA) (NYSE:LGF). Alydar Capital has a $63 million position in the stock, comprising 4.9% of its 13F portfolio. The second largest stake is held by Tremblant Capital, managed by Brett Barakett, which held a $24 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Stuart Peterson’s Artis Capital Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Malcolm Fairbairn’s Ascend Capital.
Judging by the fact that Lions Gate Entertainment Corp. (USA) (NYSE:LGF) has witnessed falling interest from hedge fund managers, it’s easy to see that there is a sect of money managers who were dropping their full holdings heading into 2013. Intriguingly, Mark Rachesky’s MHR Fund Management dumped the biggest stake of the “upper crust” of funds we track, worth about $783 million in stock.. Christopher Lord’s fund, Criterion Capital, also dropped its stock, about $8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 3 funds heading into 2013.
What have insiders been doing with Lions Gate Entertainment Corp. (USA) (NYSE:LGF)?
Insider purchases made by high-level executives is at its handiest when the company in question has seen transactions within the past six months. Over the latest half-year time frame, Lions Gate Entertainment Corp. (USA) (NYSE:LGF) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Lions Gate Entertainment Corp. (USA) (NYSE:LGF). These stocks are Carmike Cinemas, Inc. (NASDAQ:CKEC), RealD (NYSE:RLD), Dreamworks Animation Skg Inc (NASDAQ:DWA), Regal Entertainment Group (NYSE:RGC), and Cinemark Holdings, Inc. (NYSE:CNK). This group of stocks belong to the movie production, theaters industry and their market caps are similar to LGF’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Carmike Cinemas, Inc. (NASDAQ:CKEC) | 15 | 2 | 0 |
| RealD (NYSE:RLD) | 14 | 0 | 5 |
| Dreamworks Animation Skg Inc (NASDAQ:DWA) | 7 | 0 | 4 |
| Regal Entertainment Group (NYSE:RGC) | 16 | 0 | 0 |
| Cinemark Holdings, Inc. (NYSE:CNK) | 19 | 0 | 5 |
With the returns shown by Insider Monkey’s tactics, everyday investors should always monitor hedge fund and insider trading sentiment, and Lions Gate Entertainment Corp. (USA) (NYSE:LGF) is an important part of this process.
