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 Live Nation Entertainment, Inc. (NYSE:LYV) and see how the stock is affected by the recent hedge fund activity.
Live Nation Entertainment, Inc. (NYSE:LYV) investors should pay attention to an increase in enthusiasm from smart money of late. LYV was in 39 hedge funds’ portfolios at the end of March. There were 37 hedge funds in our database with LYV holdings at the end of the previous quarter. Our calculations also showed that LYV 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’ 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 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s view the latest hedge fund action encompassing Live Nation Entertainment, Inc. (NYSE:LYV).
What have hedge funds been doing with Live Nation Entertainment, Inc. (NYSE:LYV)?
At the end of the first quarter, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the fourth quarter of 2018. On the other hand, there were a total of 31 hedge funds with a bullish position in LYV a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Select Equity Group was the largest shareholder of Live Nation Entertainment, Inc. (NYSE:LYV), with a stake worth $405.1 million reported as of the end of March. Trailing Select Equity Group was Renaissance Technologies, which amassed a stake valued at $68.1 million. Horizon Asset Management, GAMCO Investors, and Diamond Hill Capital were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Live Nation Entertainment, Inc. (NYSE:LYV) headfirst. Cheyne Capital, managed by Jonathan Lourie and Stuart Fiertz, assembled the largest position in Live Nation Entertainment, Inc. (NYSE:LYV). Cheyne Capital had $5.5 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also initiated a $5.5 million position during the quarter. The other funds with brand new LYV positions are John Overdeck and David Siegel’s Two Sigma Advisors, Howard Marks’s Oaktree Capital Management, and Jeffrey Talpins’s Element Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Live Nation Entertainment, Inc. (NYSE:LYV) but similarly valued. We will take a look at Seagate Technology plc (NASDAQ:STX), Huntington Bancshares Incorporated (NASDAQ:HBAN), WPP plc (NYSE:WPP), and STMicroelectronics N.V. (NYSE:STM). All of these stocks’ market caps are similar to LYV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STX | 24 | 2033293 | -2 |
| HBAN | 28 | 100376 | 0 |
| WPP | 11 | 52078 | 0 |
| STM | 14 | 120394 | 3 |
| Average | 19.25 | 576535 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $577 million. That figure was $1021 million in LYV’s case. Huntington Bancshares Incorporated (NASDAQ:HBAN) is the most popular stock in this table. On the other hand WPP plc (NYSE:WPP) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Live Nation Entertainment, Inc. (NYSE:LYV) 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. Unfortunately LYV wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on LYV were disappointed as the stock returned -3% during the same 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
