How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Liberty Broadband Corp (NASDAQ:LBRDK) and determine whether hedge funds had an edge regarding this stock.
Liberty Broadband Corp (NASDAQ:LBRDK) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 63 hedge funds’ portfolios at the end of September. Our calculations also showed that LBRDK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare LBRDK to other stocks including LyondellBasell Industries NV (NYSE:LYB), Brown-Forman Corporation (NYSE:BF), and MongoDB, Inc. (NASDAQ:MDB) to get a better sense of its popularity.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s take a look at the recent hedge fund action regarding Liberty Broadband Corp (NASDAQ:LBRDK).
Andrew Raab of FPR Partners
Do Hedge Funds Think LBRDK Is A Good Stock To Buy Now?
At third quarter’s end, a total of 63 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in LBRDK over the last 25 quarters. So, let’s see 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 Eagle Capital Management, which reported holding $1530 million worth of stock at the end of September. It was followed by Aristeia Capital with a $946.9 million position. Other investors bullish on the company included Soros Fund Management, FPR Partners, and Stockbridge Partners. In terms of the portfolio weights assigned to each position Makaira Partners allocated the biggest weight to Liberty Broadband Corp (NASDAQ:LBRDK), around 33.57% of its 13F portfolio. Cat Rock Capital is also relatively very bullish on the stock, designating 27.15 percent of its 13F equity portfolio to LBRDK.
Due to the fact that Liberty Broadband Corp (NASDAQ:LBRDK) has experienced falling interest from hedge fund managers, logic holds that there were a few money managers who sold off their positions entirely by the end of the third quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling close to $54.3 million in stock, and Charles Pollnow’s Triple Frond Partners was right behind this move, as the fund dumped about $31.7 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to Liberty Broadband Corp (NASDAQ:LBRDK). These stocks are LyondellBasell Industries NV (NYSE:LYB), Brown-Forman Corporation (NYSE:BF), MongoDB, Inc. (NASDAQ:MDB), Corning Incorporated (NYSE:GLW), Fomento Económico Mexicano, S.A.B. de C.V. (NYSE:FMX), Ferguson plc (NYSE:FERG), and State Street Corporation (NYSE:STT). This group of stocks’ market caps match LBRDK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LYB | 39 | 676597 | -2 |
| BF | 31 | 1656640 | 0 |
| MDB | 47 | 2171957 | 3 |
| GLW | 40 | 408052 | -2 |
| FMX | 13 | 610447 | 0 |
| FERG | 10 | 6564548 | -1 |
| STT | 42 | 1479764 | 5 |
| Average | 31.7 | 1938286 | 0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.7 hedge funds with bullish positions and the average amount invested in these stocks was $1938 million. That figure was $7101 million in LBRDK’s case. MongoDB, Inc. (NASDAQ:MDB) is the most popular stock in this table. On the other hand Ferguson plc (NYSE:FERG) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Liberty Broadband Corp (NASDAQ:LBRDK) is more popular among hedge funds. Our overall hedge fund sentiment score for LBRDK is 78.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, LBRDK wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LBRDK were disappointed as the stock returned -14.1% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
Follow Liberty Broadband Corp (NASDAQ:LBRDA)
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Disclosure: None. This article was originally published at Insider Monkey.
