Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards LivePerson, Inc. (NASDAQ:LPSN).
LivePerson, Inc. (NASDAQ:LPSN) investors should pay attention to a decrease in support from the world’s most elite money managers lately. LivePerson, Inc. (NASDAQ:LPSN) was in 27 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that LPSN 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.
John Overdeck of Two Sigma Advisors
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. Now we’re going to take a gander at the fresh hedge fund action encompassing LivePerson, Inc. (NASDAQ:LPSN).
Do Hedge Funds Think LPSN 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 were bullish on this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LPSN over the last 24 quarters. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
More specifically, Polar Capital was the largest shareholder of LivePerson, Inc. (NASDAQ:LPSN), with a stake worth $72.4 million reported as of the end of June. Trailing Polar Capital was Two Sigma Advisors, which amassed a stake valued at $27 million. Portolan Capital Management, Sphera Global Healthcare Fund, and Melqart 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 Provenire Capital allocated the biggest weight to LivePerson, Inc. (NASDAQ:LPSN), around 3.58% of its 13F portfolio. Venator Capital Management is also relatively very bullish on the stock, setting aside 3.22 percent of its 13F equity portfolio to LPSN.
Due to the fact that LivePerson, Inc. (NASDAQ:LPSN) has experienced falling interest from the smart money, logic holds that there were a few funds that slashed their positions entirely heading into Q3. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the biggest investment of the “upper crust” of funds tracked by Insider Monkey, worth close to $11.6 million in stock, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management was right behind this move, as the fund cut about $4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 4 funds heading into Q3.
Let’s go over hedge fund activity in other stocks similar to LivePerson, Inc. (NASDAQ:LPSN). We will take a look at Allison Transmission Holdings Inc (NYSE:ALSN), Commscope Holding Company Inc (NASDAQ:COMM), Ryman Hospitality Properties, Inc. (NYSE:RHP), Certara, Inc. (NASDAQ:CERT), Advanced Energy Industries, Inc. (NASDAQ:AEIS), Resideo Technologies, Inc. (NYSE:REZI), and Wintrust Financial Corporation (NASDAQ:WTFC). This group of stocks’ market caps are similar to LPSN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALSN | 23 | 389663 | -7 |
| COMM | 36 | 1024585 | 4 |
| RHP | 22 | 342352 | 0 |
| CERT | 7 | 124316 | -5 |
| AEIS | 17 | 74181 | -6 |
| REZI | 28 | 682954 | 1 |
| WTFC | 18 | 222826 | -1 |
| Average | 21.6 | 408697 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $409 million. That figure was $208 million in LPSN’s case. Commscope Holding Company Inc (NASDAQ:COMM) is the most popular stock in this table. On the other hand Certara, Inc. (NASDAQ:CERT) is the least popular one with only 7 bullish hedge fund positions. LivePerson, Inc. (NASDAQ:LPSN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LPSN is 58.6. 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 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately LPSN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LPSN were disappointed as the stock returned -6.8% 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 many of these stocks already outperformed the market since 2019.
Follow Liveperson Inc (NASDAQ:LPSN)
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Disclosure: None. This article was originally published at Insider Monkey.
