At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. 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 Liberty Broadband Corp (NASDAQ:LBRDK) at the end of the second quarter and determine whether the smart money was really smart about this stock.
Liberty Broadband Corp (NASDAQ:LBRDK) investors should be aware of an increase in support from the world’s most elite money managers lately. Liberty Broadband Corp (NASDAQ:LBRDK) was in 58 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 50. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 45 hedge funds in our database with LBRDK positions at the end of the first quarter. Our calculations also showed that LBRDK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 56 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
George Soros of Soros Fund Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind we’re going to take a look at the latest hedge fund action regarding Liberty Broadband Corp (NASDAQ:LBRDK).
How are hedge funds trading Liberty Broadband Corp (NASDAQ:LBRDK)?
At Q2’s end, a total of 58 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LBRDK over the last 20 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Eagle Capital Management, managed by Boykin Curry, holds the biggest position in Liberty Broadband Corp (NASDAQ:LBRDK). Eagle Capital Management has a $748 million position in the stock, comprising 2.7% of its 13F portfolio. The second largest stake is held by Soros Fund Management, managed by George Soros, which holds a $654.7 million position; 14.6% of its 13F portfolio is allocated to the company. Some other peers with similar optimism comprise Sharlyn C. Heslam’s Stockbridge Partners, Philippe Laffont’s Coatue Management and Alexander Captain’s Cat Rock Capital. In terms of the portfolio weights assigned to each position Makaira Partners allocated the biggest weight to Liberty Broadband Corp (NASDAQ:LBRDK), around 23.5% of its 13F portfolio. Cat Rock Capital is also relatively very bullish on the stock, setting aside 21.74 percent of its 13F equity portfolio to LBRDK.
As one would reasonably expect, key money managers have been driving this bullishness. Cadian Capital, managed by Eric Bannasch, assembled the most valuable position in Liberty Broadband Corp (NASDAQ:LBRDK). Cadian Capital had $27.3 million invested in the company at the end of the quarter. Michael Pausic’s Foxhaven Asset Management also made a $21.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Leonard A. Potter’s Wildcat Capital Management, Israel Englander’s Millennium Management, and Brandon Haley’s Holocene Advisors.
Let’s check out hedge fund activity in other stocks similar to Liberty Broadband Corp (NASDAQ:LBRDK). These stocks are Best Buy Co., Inc. (NYSE:BBY), State Street Corporation (NYSE:STT), BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), Fortinet Inc (NASDAQ:FTNT), Archer Daniels Midland Company (NYSE:ADM), Palo Alto Networks Inc (NYSE:PANW), and Genmab A/S (NASDAQ:GMAB). This group of stocks’ market caps resemble LBRDK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BBY | 33 | 1062886 | -4 |
| STT | 36 | 668259 | 2 |
| BMRN | 45 | 2005739 | -9 |
| FTNT | 44 | 1815016 | 15 |
| ADM | 28 | 606680 | -4 |
| PANW | 51 | 3587653 | 4 |
| GMAB | 15 | 243405 | 1 |
| Average | 36 | 1427091 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $1427 million. That figure was $3372 million in LBRDK’s case. Palo Alto Networks Inc (NYSE:PANW) is the most popular stock in this table. On the other hand Genmab A/S (NASDAQ:GMAB) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Liberty Broadband Corp (NASDAQ:LBRDK) is more popular among hedge funds. Our overall hedge fund sentiment score for LBRDK is 90. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 28.2% in 2020 through August 24th but still managed to beat the market by 20.6 percentage points. Hedge funds were also right about betting on LBRDK, though not to the same extent, as the stock returned 13.6% since the end of June and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
