At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Lennox International Inc. (NYSE:LII) makes for a good investment right now.
Hedge fund interest in Lennox International Inc. (NYSE:LII) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare LII to other stocks including Henry Schein, Inc. (NASDAQ:HSIC), WestRock Company (NYSE:WRK), and Targa Resources Corp (NYSE:TRGP) 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.
Today there are several formulas stock market investors put to use to grade stocks. Two of the less utilized formulas are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can beat the broader indices by a superb amount (see the details here).
Clint Carlson of Carlson 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 look at the key hedge fund action regarding Lennox International Inc. (NYSE:LII).
How are hedge funds trading Lennox International Inc. (NYSE:LII)?
At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LII over the last 17 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in Lennox International Inc. (NYSE:LII) was held by Impax Asset Management, which reported holding $47.4 million worth of stock at the end of September. It was followed by Point72 Asset Management with a $31.7 million position. Other investors bullish on the company included Renaissance Technologies, Balyasny Asset Management, and Millennium Management. In terms of the portfolio weights assigned to each position Bishop Rock Capital allocated the biggest weight to Lennox International Inc. (NYSE:LII), around 2.33% of its 13F portfolio. Impax Asset Management is also relatively very bullish on the stock, dishing out 0.62 percent of its 13F equity portfolio to LII.
Due to the fact that Lennox International Inc. (NYSE:LII) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few fund managers that decided to sell off their entire stakes by the end of the third quarter. It’s worth mentioning that Robert B. Gillam’s McKinley Capital Management cut the largest stake of all the hedgies monitored by Insider Monkey, valued at an estimated $9 million in stock. Alexander Mitchell’s fund, Scopus Asset Management, also cut its stock, about $6.5 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Lennox International Inc. (NYSE:LII). We will take a look at Henry Schein, Inc. (NASDAQ:HSIC), WestRock Company (NYSE:WRK), Targa Resources Corp (NYSE:TRGP), and Iron Mountain Incorporated (NYSE:IRM). This group of stocks’ market values are similar to LII’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HSIC | 22 | 1248443 | -2 |
| WRK | 26 | 606489 | 0 |
| TRGP | 16 | 241333 | -2 |
| IRM | 14 | 58210 | 0 |
| Average | 19.5 | 538619 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $539 million. That figure was $194 million in LII’s case. WestRock Company (NYSE:WRK) is the most popular stock in this table. On the other hand Iron Mountain Incorporated (NYSE:IRM) is the least popular one with only 14 bullish hedge fund positions. Lennox International Inc. (NYSE:LII) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately LII wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on LII were disappointed as the stock returned 5.3% 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
