Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we publish an article with the title “Recession is Imminent: We Need A Travel Ban NOW”. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president.
We can judge whether The Liberty SiriusXM Group (NASDAQ:LSXMK) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
The Liberty SiriusXM Group (NASDAQ:LSXMK) has experienced an increase in hedge fund interest in recent months. Our calculations also showed that LSXMK isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Warren Buffett of Berkshire Hathaway
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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Now we’re going to take a glance at the fresh hedge fund action surrounding The Liberty SiriusXM Group (NASDAQ:LSXMK).
Hedge fund activity in The Liberty SiriusXM Group (NASDAQ:LSXMK)
At the end of the fourth quarter, a total of 54 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LSXMK over the last 18 quarters. So, let’s review 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, Berkshire Hathaway, managed by Warren Buffett, holds the number one position in The Liberty SiriusXM Group (NASDAQ:LSXMK). Berkshire Hathaway has a $1.4967 billion position in the stock, comprising 0.6% of its 13F portfolio. The second largest stake is held by Bob Peck and Andy Raab of FPR Partners, with a $338 million position; 7% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that hold long positions contain D. E. Shaw’s D E Shaw, Ken Griffin’s Citadel Investment Group and Ryan Frick and Oliver Evans’s Dorsal Capital Management. In terms of the portfolio weights assigned to each position Steel Canyon Capital allocated the biggest weight to The Liberty SiriusXM Group (NASDAQ:LSXMK), around 20.11% of its 13F portfolio. Swift Run Capital Management is also relatively very bullish on the stock, earmarking 9.27 percent of its 13F equity portfolio to LSXMK.
As industrywide interest jumped, specific money managers have jumped into The Liberty SiriusXM Group (NASDAQ:LSXMK) headfirst. ThornTree Capital Partners, managed by Mark Moore, established the largest position in The Liberty SiriusXM Group (NASDAQ:LSXMK). ThornTree Capital Partners had $26.8 million invested in the company at the end of the quarter. Clint Carlson’s Carlson Capital also initiated a $9.1 million position during the quarter. The other funds with brand new LSXMK positions are Brandon Haley’s Holocene Advisors, Nick Thakore’s Diametric Capital, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as The Liberty SiriusXM Group (NASDAQ:LSXMK) but similarly valued. We will take a look at BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), Korea Electric Power Corporation (NYSE:KEP), Kansas City Southern (NYSE:KSU), and Old Dominion Freight Line (NASDAQ:ODFL). This group of stocks’ market caps match LSXMK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BMRN | 49 | 1937452 | 0 |
| KEP | 3 | 45485 | -4 |
| KSU | 40 | 414826 | 7 |
| ODFL | 34 | 321532 | 10 |
| Average | 31.5 | 679824 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.5 hedge funds with bullish positions and the average amount invested in these stocks was $680 million. That figure was $3333 million in LSXMK’s case. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is the most popular stock in this table. On the other hand Korea Electric Power Corporation (NYSE:KEP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks The Liberty SiriusXM Group (NASDAQ:LSXMK) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 12.9% in 2020 through March 9th and still beat the market by 1.9 percentage points. Unfortunately LSXMK wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on LSXMK were disappointed as the stock returned -16.5% during the first two months of 2020 (through March 9th) 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 most of these stocks already outperformed the market in Q1.
Disclosure: None. This article was originally published at Insider Monkey.
