Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we pay special attention to the hedge fund activity in the small-cap space.
LTC Properties Inc (NYSE:LTC) was in 12 hedge funds’ portfolios at the end of the fourth quarter of 2018. LTC shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. There were 9 hedge funds in our database with LTC positions at the end of the previous quarter. Our calculations also showed that ltc isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to analyze the latest hedge fund action encompassing LTC Properties Inc (NYSE:LTC).
What have hedge funds been doing with LTC Properties Inc (NYSE:LTC)?
Heading into the first quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the second quarter of 2018. On the other hand, there were a total of 11 hedge funds with a bullish position in LTC a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in LTC Properties Inc (NYSE:LTC) was held by Renaissance Technologies, which reported holding $15.4 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $6.9 million position. Other investors bullish on the company included Two Sigma Advisors, Millennium Management, and D E Shaw.
As one would reasonably expect, some big names have been driving this bullishness. D E Shaw, managed by D. E. Shaw, assembled the largest position in LTC Properties Inc (NYSE:LTC). D E Shaw had $1.4 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also initiated a $0.4 million position during the quarter. The following funds were also among the new LTC investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Minhua Zhang’s Weld Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s check out hedge fund activity in other stocks similar to LTC Properties Inc (NYSE:LTC). These stocks are Advanced Energy Industries, Inc. (NASDAQ:AEIS), The Hain Celestial Group, Inc. (NASDAQ:HAIN), Signet Jewelers Limited (NYSE:SIG), and Bloomin’ Brands Inc (NASDAQ:BLMN). All of these stocks’ market caps are similar to LTC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AEIS | 15 | 137880 | -4 |
| HAIN | 21 | 282907 | -2 |
| SIG | 21 | 200232 | -5 |
| BLMN | 22 | 268702 | -4 |
| Average | 19.75 | 222430 | -3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $222 million. That figure was $35 million in LTC’s case. Bloomin’ Brands Inc (NASDAQ:BLMN) is the most popular stock in this table. On the other hand Advanced Energy Industries, Inc. (NASDAQ:AEIS) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks LTC Properties Inc (NYSE:LTC) is even less popular than AEIS. Hedge funds dodged a bullet by taking a bearish stance towards LTC. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately LTC wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); LTC investors were disappointed as the stock returned 5.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
