It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren’t usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index’s returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you’d fail to beat the market. At the same time, the 20 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated an outperformance of more than 8 percentage points so far in 2019. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Lazydays Holdings, Inc. (NASDAQ:LAZY).
Lazydays Holdings, Inc. (NASDAQ:LAZY) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds’ portfolios at the end of the third quarter of 2019. At the end of this article we will also compare LAZY to other stocks including Zomedica Pharmaceuticals Corp. (NYSEAMERICAN:ZOM), Alimera Sciences Inc (NASDAQ:ALIM), and Quorum Health Corporation (NYSE:QHC) to get a better sense of its popularity.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Chuck Royce of Royce & Associates
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now let’s take a look at the fresh hedge fund action regarding Lazydays Holdings, Inc. (NASDAQ:LAZY).
How have hedgies been trading Lazydays Holdings, Inc. (NASDAQ:LAZY)?
At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LAZY over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Park West Asset Management held the most valuable stake in Lazydays Holdings, Inc. (NASDAQ:LAZY), which was worth $3.7 million at the end of the third quarter. On the second spot was Nokomis Capital which amassed $2.2 million worth of shares. Coliseum Capital, Millennium Management, and Royce & Associates were 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 Coliseum Capital allocated the biggest weight to Lazydays Holdings, Inc. (NASDAQ:LAZY), around 0.52% of its 13F portfolio. Nokomis Capital is also relatively very bullish on the stock, earmarking 0.47 percent of its 13F equity portfolio to LAZY.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Lazydays Holdings, Inc. (NASDAQ:LAZY) but similarly valued. These stocks are Zomedica Pharmaceuticals Corp. (NYSEAMERICAN:ZOM), Alimera Sciences Inc (NASDAQ:ALIM), Quorum Health Corporation (NYSE:QHC), and Nautilus, Inc. (NYSE:NLS). This group of stocks’ market values match LAZY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ZOM | 5 | 64 | 3 |
| ALIM | 9 | 13895 | 0 |
| QHC | 11 | 7125 | 0 |
| NLS | 13 | 6908 | -1 |
| Average | 9.5 | 6998 | 0.5 |
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 $7 million. That figure was $8 million in LAZY’s case. Nautilus, Inc. (NYSE:NLS) is the most popular stock in this table. On the other hand Zomedica Pharmaceuticals Corp. (NYSEAMERICAN:ZOM) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Lazydays Holdings, Inc. (NASDAQ:LAZY) is even less popular than ZOM. Hedge funds dodged a bullet by taking a bearish stance towards LAZY. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately LAZY wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); LAZY investors were disappointed as the stock returned -12.6% during the fourth quarter (through the end of November) 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.
