Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by nearly 9 percentage points since the end of the third quarter of 2018 as investors worried over the possible ramifications of rising interest rates and escalation of the trade war with China. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only 298 S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Liberty Broadband Corp (NASDAQ:LBRDK) and see how the stock is affected by the recent hedge fund activity.
Liberty Broadband Corp (NASDAQ:LBRDK) investors should pay attention to an increase in enthusiasm from smart money recently. LBRDK was in 39 hedge funds’ portfolios at the end of the first quarter of 2019. There were 35 hedge funds in our database with LBRDK positions at the end of the previous quarter. Our calculations also showed that LBRDK 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 40 percentage points since May 2014 through May 30, 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 take a gander at the new hedge fund action encompassing Liberty Broadband Corp (NASDAQ:LBRDK).
Hedge fund activity in Liberty Broadband Corp (NASDAQ:LBRDK)
At Q1’s end, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in LBRDK over the last 15 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Liberty Broadband Corp (NASDAQ:LBRDK) was held by Coatue Management, which reported holding $738 million worth of stock at the end of March. It was followed by Soros Fund Management with a $668.9 million position. Other investors bullish on the company included Eagle Capital Management, SQ Advisors, and Stockbridge Partners.
Now, key hedge funds were leading the bulls’ herd. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, established the largest position in Liberty Broadband Corp (NASDAQ:LBRDK). Senator Investment Group had $29.4 million invested in the company at the end of the quarter. Francis Cueto’s Asturias Capital also initiated a $8.8 million position during the quarter. The following funds were also among the new LBRDK investors: Eli Cohen’s Crescent Park Management, Joshua Nash’s Ulysses Management, and William Hyatt’s Hudson Way Capital Management.
Let’s go over hedge fund activity in other stocks similar to Liberty Broadband Corp (NASDAQ:LBRDK). These stocks are Liberty Broadband Corp (NASDAQ:LBRDA), CBRE Group, Inc. (NYSE:CBRE), Restaurant Brands International Inc (NYSE:QSR), and Keysight Technologies Inc (NYSE:KEYS). All of these stocks’ market caps are closest to LBRDK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LBRDA | 19 | 579556 | 0 |
| CBRE | 31 | 1403036 | -3 |
| QSR | 37 | 3609311 | 0 |
| KEYS | 37 | 967108 | 3 |
| Average | 31 | 1639753 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $1640 million. That figure was $3314 million in LBRDK’s case. Restaurant Brands International Inc (NYSE:QSR) is the most popular stock in this table. On the other hand Liberty Broadband Corp (NASDAQ:LBRDA) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Liberty Broadband Corp (NASDAQ:LBRDK) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on LBRDK as the stock returned 7.8% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
