Is Lifetime Brands Inc (LCUT) Going to Burn These Hedge Funds?

In this article we will check out the progression of hedge fund sentiment towards Lifetime Brands Inc (NASDAQ:LCUT) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Lifetime Brands Inc (NASDAQ:LCUT) was in 4 hedge funds’ portfolios at the end of March. The all time high for this statistic is 7. LCUT shareholders have witnessed a decrease in enthusiasm from smart money lately. There were 7 hedge funds in our database with LCUT positions at the end of the fourth quarter. Our calculations also showed that LCUT isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 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 S&P 500 ETFs by 115 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 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.

Gavin Saitowitz of Prelude Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s take a look at the fresh hedge fund action regarding Lifetime Brands Inc (NASDAQ:LCUT).

Do Hedge Funds Think LCUT Is A Good Stock To Buy Now?

At the end of March, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -43% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards LCUT over the last 23 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mill Road Capital Management, managed by Thomas E. Lynch, holds the biggest position in Lifetime Brands Inc (NASDAQ:LCUT). Mill Road Capital Management has a $23 million position in the stock, comprising 7.6% of its 13F portfolio. On Mill Road Capital Management’s heels is Prelude Capital (previously Springbok Capital), managed by Gavin Saitowitz and Cisco J. del Valle, which holds a $2.2 million call position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions include Renaissance Technologies, Chuck Royce’s Royce & Associates and Matthew Hulsizer’s PEAK6 Capital Management. In terms of the portfolio weights assigned to each position Mill Road Capital Management allocated the biggest weight to Lifetime Brands Inc (NASDAQ:LCUT), around 7.62% of its 13F portfolio. Prelude Capital (previously Springbok Capital) is also relatively very bullish on the stock, dishing out 0.06 percent of its 13F equity portfolio to LCUT.

Judging by the fact that Lifetime Brands Inc (NASDAQ:LCUT) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there was a specific group of hedge funds that slashed their positions entirely heading into Q2. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP cut the biggest investment of all the hedgies watched by Insider Monkey, valued at an estimated $0.3 million in stock, and Dov Gertzulin’s DG Capital Management was right behind this move, as the fund dumped about $0.3 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 3 funds heading into Q2.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Lifetime Brands Inc (NASDAQ:LCUT) but similarly valued. We will take a look at Carrols Restaurant Group, Inc. (NASDAQ:TAST), PolyMet Mining Corp. (NYSE:PLM), Arbutus Biopharma Corp (NASDAQ:ABUS), Centrus Energy Corp. (NYSE:LEU), Net 1 UEPS Technologies Inc (NASDAQ:UEPS), iRadimed Corporation (NASDAQ:IRMD), and G. Willi-Food International Limited (NASDAQ:WILC). This group of stocks’ market caps are closest to LCUT’s market cap.

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As you can see these stocks had an average of 7.6 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $27 million in LCUT’s case. Arbutus Biopharma Corp (NASDAQ:ABUS) is the most popular stock in this table. On the other hand G. Willi-Food International Limited (NASDAQ:WILC) is the least popular one with only 2 bullish hedge fund positions. Lifetime Brands Inc (NASDAQ:LCUT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LCUT is 26.8. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on LCUT as the stock returned 13.5% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.