While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Landmark Infrastructure Partners LP (NASDAQ:LMRK).
Is Landmark Infrastructure Partners LP (NASDAQ:LMRK) a buy, sell, or hold? The smart money is turning less bullish. The number of long hedge fund positions were cut by 1 recently. Our calculations also showed that LMRK 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
Matthew Hulsizer of PEAK6 Capital
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a peek at the recent hedge fund action regarding Landmark Infrastructure Partners LP (NASDAQ:LMRK).
How have hedgies been trading Landmark Infrastructure Partners LP (NASDAQ:LMRK)?
At Q3’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LMRK over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Ancora Advisors held the most valuable stake in Landmark Infrastructure Partners LP (NASDAQ:LMRK), which was worth $1.3 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $1.2 million worth of shares. PEAK6 Capital Management was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ancora Advisors allocated the biggest weight to Landmark Infrastructure Partners LP (NASDAQ:LMRK), around 0.06% of its portfolio. Citadel Investment Group is also relatively very bullish on the stock, earmarking 0.0006 percent of its 13F equity portfolio to LMRK.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Springbok Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified LMRK as a viable investment and initiated a position in the stock.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Landmark Infrastructure Partners LP (NASDAQ:LMRK) but similarly valued. These stocks are Milestone Pharmaceuticals Inc. (NASDAQ:MIST), Personalis, Inc. (NASDAQ:PSNL), Boston Omaha Corporation (NASDAQ:BOMN), and BBX Capital Corporation (NYSE:BBX). This group of stocks’ market caps are similar to LMRK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MIST | 6 | 22541 | -1 |
| PSNL | 11 | 24511 | -6 |
| BOMN | 7 | 205119 | 2 |
| BBX | 14 | 29039 | -1 |
| Average | 9.5 | 70303 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $70 million. That figure was $2 million in LMRK’s case. BBX Capital Corporation (NYSE:BBX) is the most popular stock in this table. On the other hand Milestone Pharmaceuticals Inc. (NASDAQ:MIST) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Landmark Infrastructure Partners LP (NASDAQ:LMRK) is even less popular than MIST. Hedge funds dodged a bullet by taking a bearish stance towards LMRK. Our calculations showed that the top 20 most popular hedge fund stocks returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately LMRK wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); LMRK investors were disappointed as the stock returned -11.2% during the fourth quarter (through 11/22) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
