The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards LendingClub Corp (NYSE:LC).
Is LendingClub Corp (NYSE:LC) a worthy stock to buy now? Prominent investors are in a pessimistic mood. The number of bullish hedge fund bets were trimmed by 1 lately. Our calculations also showed that LC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). LC was in 7 hedge funds’ portfolios at the end of March. There were 8 hedge funds in our database with LC holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 58 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a peek at the new hedge fund action regarding LendingClub Corp (NYSE:LC).
How have hedgies been trading LendingClub Corp (NYSE:LC)?
At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the fourth quarter of 2019. By comparison, 11 hedge funds held shares or bullish call options in LC 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, Citadel Investment Group was the largest shareholder of LendingClub Corp (NYSE:LC), with a stake worth $1.4 million reported as of the end of September. Trailing Citadel Investment Group was Citadel Investment Group, which amassed a stake valued at $1.1 million. PDT Partners, AQR Capital Management, and Balyasny Asset Management 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 PDT Partners allocated the biggest weight to LendingClub Corp (NYSE:LC), around 0.05% of its 13F portfolio. CSat Investment Advisory is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to LC.
Seeing as LendingClub Corp (NYSE:LC) has experienced falling interest from the smart money, it’s easy to see that there lies a certain “tier” of hedge funds that decided to sell off their positions entirely heading into Q4. At the top of the heap, Renaissance Technologies said goodbye to the largest position of all the hedgies monitored by Insider Monkey, comprising an estimated $0.3 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also said goodbye to its stock, about $0.2 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 1 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as LendingClub Corp (NYSE:LC) but similarly valued. These stocks are Seacor Holdings, Inc. (NYSE:CKH), ScanSource, Inc. (NASDAQ:SCSC), Warrior Met Coal Inc. (NYSE:HCC), and Vivint Solar Inc (NYSE:VSLR). This group of stocks’ market valuations match LC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CKH | 9 | 77355 | -7 |
| SCSC | 14 | 52677 | -1 |
| HCC | 24 | 134947 | -5 |
| VSLR | 16 | 34698 | 3 |
| Average | 15.75 | 74919 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $3 million in LC’s case. Warrior Met Coal Inc. (NYSE:HCC) is the most popular stock in this table. On the other hand Seacor Holdings, Inc. (NYSE:CKH) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks LendingClub Corp (NYSE:LC) is even less popular than CKH. Hedge funds dodged a bullet by taking a bearish stance towards LC. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. Unfortunately LC wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); LC investors were disappointed as the stock returned -25.9% during the second quarter (through June 10th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
