Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter of 2018. Trends reversed 180 degrees in 2019 amid Powell’s pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the third quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Landec Corporation (NASDAQ:LNDC).
Landec Corporation (NASDAQ:LNDC) was in 13 hedge funds’ portfolios at the end of the third quarter of 2019. LNDC has experienced an increase in support from the world’s most elite money managers of late. There were 11 hedge funds in our database with LNDC holdings at the end of the previous quarter. Our calculations also showed that LNDC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most investors, hedge funds are seen as underperforming, old investment tools of yesteryear. While there are over 8000 funds with their doors open today, Our researchers hone in on the moguls of this group, around 750 funds. These money managers administer the majority of the smart money’s total asset base, and by monitoring their inimitable investments, Insider Monkey has unearthed a number of investment strategies that have historically surpassed the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Nelson Obus of Wynnefield Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the recent hedge fund action encompassing Landec Corporation (NASDAQ:LNDC).
How are hedge funds trading Landec Corporation (NASDAQ:LNDC)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the previous quarter. By comparison, 9 hedge funds held shares or bullish call options in LNDC a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Nelson Obus’s Wynnefield Capital has the biggest position in Landec Corporation (NASDAQ:LNDC), worth close to $31.2 million, corresponding to 16.6% of its total 13F portfolio. The second largest stake is held by Ted White and Christopher Kiper of Legion Partners Asset Management, with a $6.6 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish comprise Raymond J. Harbert’s Harbert Management, Chuck Royce’s Royce & Associates and Frederick DiSanto’s Ancora Advisors. In terms of the portfolio weights assigned to each position Wynnefield Capital allocated the biggest weight to Landec Corporation (NASDAQ:LNDC), around 16.6% of its 13F portfolio. Harbert Management is also relatively very bullish on the stock, dishing out 4.04 percent of its 13F equity portfolio to LNDC.
As one would reasonably expect, specific money managers have jumped into Landec Corporation (NASDAQ:LNDC) headfirst. Legion Partners Asset Management, managed by Ted White and Christopher Kiper, initiated the largest position in Landec Corporation (NASDAQ:LNDC). Legion Partners Asset Management had $6.6 million invested in the company at the end of the quarter. Raymond J. Harbert’s Harbert Management also made a $2.7 million investment in the stock during the quarter. The other funds with new positions in the stock are David Harding’s Winton Capital Management, David E. Shaw’s D E Shaw, and Michael Gelband’s ExodusPoint Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Landec Corporation (NASDAQ:LNDC) but similarly valued. These stocks are Telaria, Inc. (NYSE:TLRA), Noble Corporation (NYSE:NE), Protagonist Therapeutics, Inc. (NASDAQ:PTGX), and BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX). This group of stocks’ market valuations are similar to LNDC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TLRA | 17 | 47266 | 3 |
| NE | 13 | 48356 | -3 |
| PTGX | 15 | 105807 | 1 |
| BCRX | 16 | 102956 | 2 |
| Average | 15.25 | 76096 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $46 million in LNDC’s case. Telaria, Inc. (NYSE:TLRA) is the most popular stock in this table. On the other hand Noble Corporation (NYSE:NE) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Landec Corporation (NASDAQ:LNDC) is even less popular than NE. Hedge funds dodged a bullet by taking a bearish stance towards LNDC. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately LNDC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); LNDC investors were disappointed as the stock returned 5.4% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
