There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Linx S.A. (NYSE:LINX).
Linx S.A. (NYSE:LINX) was in 14 hedge funds’ portfolios at the end of the second quarter of 2019. LINX investors should pay attention to an increase in hedge fund sentiment recently. There were 0 hedge funds in our database with LINX positions at the end of the previous quarter. Our calculations also showed that LINX isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most traders, hedge funds are seen as worthless, outdated financial vehicles of yesteryear. While there are over 8000 funds with their doors open at present, We hone in on the crème de la crème of this club, about 750 funds. These hedge fund managers shepherd bulk of the hedge fund industry’s total capital, and by shadowing their best picks, Insider Monkey has uncovered a number of investment strategies that have historically outrun the market. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the recent hedge fund action regarding Linx S.A. (NYSE:LINX).
What have hedge funds been doing with Linx S.A. (NYSE:LINX)?
Heading into the third quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14 from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in LINX 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.
Among these funds, Tiger Global Management LLC held the most valuable stake in Linx S.A. (NYSE:LINX), which was worth $30.6 million at the end of the second quarter. On the second spot was Key Square Capital Management which amassed $13.7 million worth of shares. Moreover, SCGE Management, Alyeska Investment Group, and Element Capital Management were also bullish on Linx S.A. (NYSE:LINX), allocating a large percentage of their portfolios to this stock.
Now, key hedge funds were breaking ground themselves. Tiger Global Management LLC, managed by Chase Coleman, created the most outsized position in Linx S.A. (NYSE:LINX). Tiger Global Management LLC had $30.6 million invested in the company at the end of the quarter. Scott Bessent’s Key Square Capital Management also initiated a $13.7 million position during the quarter. The following funds were also among the new LINX investors: Christopher Lyle’s SCGE Management, Anand Parekh’s Alyeska Investment Group, and Jeffrey Talpins’s Element Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Linx S.A. (NYSE:LINX) but similarly valued. These stocks are Ra Pharmaceuticals, Inc. (NASDAQ:RARX), The Liberty Braves Group (NASDAQ:BATRK), The Liberty Braves Group (NASDAQ:BATRA), and Central Puerto S.A. (NYSE:CEPU). This group of stocks’ market caps resemble LINX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RARX | 18 | 367537 | -2 |
| BATRK | 23 | 332871 | -5 |
| BATRA | 9 | 68220 | -2 |
| CEPU | 9 | 31985 | -3 |
| Average | 14.75 | 200153 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $200 million. That figure was $84 million in LINX’s case. The Liberty Braves Group (NASDAQ:BATRK) is the most popular stock in this table. On the other hand The Liberty Braves Group (NASDAQ:BATRA) is the least popular one with only 9 bullish hedge fund positions. Linx S.A. (NYSE:LINX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately LINX wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); LINX investors were disappointed as the stock returned -15.2% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.