Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Liberty Global plc (NASDAQ:LBTYA) to find out whether there were any major changes in hedge funds’ views.
Is LBTYA stock a buy? The best stock pickers were taking an optimistic view. The number of bullish hedge fund positions inched up by 1 lately. Liberty Global plc (NASDAQ:LBTYA) was in 36 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 64. Our calculations also showed that LBTYA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
Seth Klarman of Baupost Group
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s review the latest hedge fund action surrounding Liberty Global plc (NASDAQ:LBTYA).
Do Hedge Funds Think LBTYA Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in LBTYA over the last 22 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Berkshire Hathaway held the most valuable stake in Liberty Global plc (NASDAQ:LBTYA), which was worth $436.2 million at the end of the fourth quarter. On the second spot was Baupost Group which amassed $185.5 million worth of shares. Route One Investment Company, Renaissance Technologies, and Bill & Melinda Gates Foundation Trust 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 Lion Point allocated the biggest weight to Liberty Global plc (NASDAQ:LBTYA), around 5.83% of its 13F portfolio. Route One Investment Company is also relatively very bullish on the stock, setting aside 4.21 percent of its 13F equity portfolio to LBTYA.
Consequently, key hedge funds have jumped into Liberty Global plc (NASDAQ:LBTYA) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the biggest position in Liberty Global plc (NASDAQ:LBTYA). Arrowstreet Capital had $11.2 million invested in the company at the end of the quarter. Stuart Powers’s Hengistbury Investment Partners also made a $7.5 million investment in the stock during the quarter. The following funds were also among the new LBTYA investors: Noam Gottesman’s GLG Partners, Paul Tudor Jones’s Tudor Investment Corp, and Ray Dalio’s Bridgewater Associates.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Liberty Global plc (NASDAQ:LBTYA) but similarly valued. These stocks are Black Knight, Inc. (NYSE:BKI), Natura &Co Holding S.A. (NYSE:NTCO), Sunrun Inc (NASDAQ:RUN), iQIYI, Inc. (NASDAQ:IQ), VICI Properties Inc. (NYSE:VICI), Principal Financial Group Inc (NYSE:PFG), and Eastman Chemical Company (NYSE:EMN). This group of stocks’ market values resemble LBTYA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BKI | 44 | 994940 | 3 |
| NTCO | 4 | 82302 | 0 |
| RUN | 48 | 3008231 | 19 |
| IQ | 30 | 1048707 | 12 |
| VICI | 38 | 970234 | -2 |
| PFG | 26 | 117451 | 1 |
| EMN | 31 | 133838 | 4 |
| Average | 31.6 | 907958 | 5.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.6 hedge funds with bullish positions and the average amount invested in these stocks was $908 million. That figure was $1123 million in LBTYA’s case. Sunrun Inc (NASDAQ:RUN) is the most popular stock in this table. On the other hand Natura &Co Holding S.A. (NYSE:NTCO) is the least popular one with only 4 bullish hedge fund positions. Liberty Global plc (NASDAQ:LBTYA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LBTYA is 59.2. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and beat the market again by 0.4 percentage points. Unfortunately LBTYA wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on LBTYA were disappointed as the stock returned 6.5% since the end of December (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
