Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published 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 (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. At Insider Monkey, we pore over the filings of nearly 835 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31. In this article, we will use that wealth of knowledge to determine whether or not LiveRamp Holdings, Inc. (NYSE:RAMP) makes for a good investment right now.
Is LiveRamp Holdings, Inc. (NYSE:RAMP) a good investment now? Money managers are in an optimistic mood. The number of bullish hedge fund positions moved up by 1 in recent months. Our calculations also showed that RAMP isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Dmitry Balyasny of Balyasny Asset Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a gander at the new hedge fund action encompassing LiveRamp Holdings, Inc. (NYSE:RAMP).
Hedge fund activity in LiveRamp Holdings, Inc. (NYSE:RAMP)
At the end of the fourth quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the previous quarter. On the other hand, there were a total of 18 hedge funds with a bullish position in RAMP a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, RGM Capital held the most valuable stake in LiveRamp Holdings, Inc. (NYSE:RAMP), which was worth $97 million at the end of the third quarter. On the second spot was Portsea Asset Management which amassed $18.2 million worth of shares. Balyasny Asset Management, Ancora Advisors, and Abrams Bison Investments were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Portsea Asset Management allocated the biggest weight to LiveRamp Holdings, Inc. (NYSE:RAMP), around 11.81% of its 13F portfolio. RGM Capital is also relatively very bullish on the stock, setting aside 5.55 percent of its 13F equity portfolio to RAMP.
With a general bullishness amongst the heavyweights, some big names have jumped into LiveRamp Holdings, Inc. (NYSE:RAMP) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the largest position in LiveRamp Holdings, Inc. (NYSE:RAMP). Balyasny Asset Management had $17.7 million invested in the company at the end of the quarter. David Atterbury’s Whetstone Capital Advisors also initiated a $6 million position during the quarter. The other funds with brand new RAMP positions are James Thomas Berylson’s Berylson Capital Partners, David Harding’s Winton Capital Management, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as LiveRamp Holdings, Inc. (NYSE:RAMP) but similarly valued. We will take a look at GW Pharmaceuticals plc (NASDAQ:GWPH), Qualys Inc (NASDAQ:QLYS), Iridium Communications Inc. (NASDAQ:IRDM), and Valmont Industries, Inc. (NYSE:VMI). All of these stocks’ market caps resemble RAMP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GWPH | 24 | 366117 | -8 |
| QLYS | 29 | 179997 | 10 |
| IRDM | 20 | 285571 | 2 |
| VMI | 24 | 315469 | -4 |
| Average | 24.25 | 286789 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $287 million. That figure was $176 million in RAMP’s case. Qualys Inc (NASDAQ:QLYS) is the most popular stock in this table. On the other hand Iridium Communications Inc. (NASDAQ:IRDM) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks LiveRamp Holdings, Inc. (NYSE:RAMP) is even less popular than IRDM. Hedge funds dodged a bullet by taking a bearish stance towards RAMP. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but managed to beat the market by 5.5 percentage points. Unfortunately RAMP wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); RAMP investors were disappointed as the stock returned -36.4% during the same time period 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 so far in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
