A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on LSB Industries, Inc. (NYSE:LXU).
LSB Industries, Inc. (NYSE:LXU) has experienced an increase in support from the world’s most elite money managers recently. LXU was in 6 hedge funds’ portfolios at the end of the third quarter of 2018. There were 4 hedge funds in our database with LXU holdings at the end of the previous quarter. Our calculations also showed that LXU isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s go over the key hedge fund action regarding LSB Industries, Inc. (NYSE:LXU).
What does the smart money think about LSB Industries, Inc. (NYSE:LXU)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from one quarter earlier. By comparison, 4 hedge funds held shares or bullish call options in LXU heading into this year. So, let’s find out 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, Tontine Asset Management, managed by Jeffrey Gendell, holds the number one position in LSB Industries, Inc. (NYSE:LXU). Tontine Asset Management has a $26.8 million position in the stock, comprising 2.3% of its 13F portfolio. The second most bullish fund manager is Royce & Associates, managed by Chuck Royce, which holds a $3.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism encompass Peter Muller’s PDT Partners, Jim Simons’s Renaissance Technologies and Ken Griffin’s Citadel Investment Group.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Renaissance Technologies, managed by Jim Simons, created the largest position in LSB Industries, Inc. (NYSE:LXU). Renaissance Technologies had $0.4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.2 million investment in the stock during the quarter. The only other fund with a new position in the stock is D. E. Shaw’s D E Shaw.
Let’s go over hedge fund activity in other stocks similar to LSB Industries, Inc. (NYSE:LXU). These stocks are MannKind Corporation (NASDAQ:MNKD), Napco Security Technologies Inc (NASDAQ:NSSC), Tyme Technologies, Inc. (NASDAQ:TYME), and Energy XXI Gulf Coast, Inc. (NASDAQ:EGC). This group of stocks’ market valuations match LXU’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MNKD | 7 | 7517 | -3 |
| NSSC | 5 | 6487 | 3 |
| TYME | 6 | 6454 | 1 |
| EGC | 13 | 62180 | 4 |
| Average | 7.75 | 20660 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $32 million in LXU’s case. Energy XXI Gulf Coast, Inc. (NYSE:EGC) is the most popular stock in this table. On the other hand Napco Security Technologies Inc (NASDAQ:NSSC) is the least popular one with only 5 bullish hedge fund positions. LSB Industries, Inc. (NYSE:LXU) 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 EGC might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
