Here is What Hedge Funds Think About Libbey Inc. (LBY)

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 5.2% in the 12 month-period that ended October 30, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular S&P 500 stocks among the hedge fund investors tracked by the Insider Monkey team returned 9.5% over the same period, which provides evidence that these money managers do have great stock picking abilities. Even more to that, 63% of these stocks managed to beat the S&P 500 Index. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Libbey Inc. (NYSEMKT:LBY).

Is Libbey Inc. (NYSEMKT:LBY) undervalued? Prominent investors are taking a pessimistic view. The number of long hedge fund bets dropped by 2 recently. LBY was in 17 hedge funds’ portfolios at the end of September. There were 19 hedge funds in our database with LBY positions at the end of the previous quarter. At the end of this article we will also compare LBY to other stocks including Brookline Bancorp, Inc. (NASDAQ:BRKL), Isle of Capri Casinos (NASDAQ:ISLE), and Wabash National Corporation (NYSE:WNC) to get a better sense of its popularity.

Now, let’s check out the new action regarding Libbey Inc. (NYSEMKT:LBY).

What does the smart money think about Libbey Inc. (NYSEMKT:LBY)?

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Debra Fine’s Fine Capital Partners has the biggest position in Libbey Inc. (NYSEMKT:LBY), worth close to $43.9 million, accounting for 4.3% of its total 13F portfolio. On Fine Capital Partners’ heels is Spitfire Capital, led by Julian Allen, holding a $24 million position; 10.3% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include Richard S. Meisenberg’s ACK Asset Management, Craig A. Drill’s Craig Drill Capital and Charles Paquelet’s Skylands Capital.

Due to the fact that Libbey Inc. (NYSEMKT:LBY) has experienced falling interest from hedge fund managers, we can see that there lies a certain “tier” of hedge funds that slashed their full holdings last quarter. At the top of the heap, Charles Davidson’s Wexford Capital cut the biggest investment of all the hedgies followed by Insider Monkey, comprising close to $2.1 million in stock. Israel Englander’s fund, Millennium Management, also sold off its stock, about $0.4 million worth. These moves are interesting, as total hedge fund interest was cut by 2 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Libbey Inc. (NYSEMKT:LBY) but similarly valued. We will take a look at Brookline Bancorp, Inc. (NASDAQ:BRKL), Isle of Capri Casinos (NASDAQ:ISLE), Wabash National Corporation (NYSE:WNC), and Roadrunner Transportation Systems Inc (NYSE:RRTS). This group of stocks’ market valuations are closest to LBY’s market valuation.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $164 million in LBY’s case. Isle of Capri Casinos (NASDAQ:ISLE) is the most popular stock in this table. On the other hand Roadrunner Transportation Systems Inc (NYSE:RRTS) is the least popular one with only 11 bullish hedge fund positions. Libbey Inc. (NYSEMKT:LBY) 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. In this regard ISLE might be a better candidate to consider a long position.