Is LightPath Technologies, Inc. (LPTH) A Good Stock To Buy?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about LightPath Technologies, Inc. (NASDAQ:LPTH).

Is LPTH a good stock to buy? LightPath Technologies, Inc. (NASDAQ:LPTH) investors should be aware of a decrease in enthusiasm from smart money recently. LightPath Technologies, Inc. (NASDAQ:LPTH) was in 4 hedge funds’ portfolios at the end of March. The all time high for this statistic is 7. There were 5 hedge funds in our database with LPTH holdings at the end of December. Our calculations also showed that LPTH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

At the moment there are plenty of signals investors have at their disposal to evaluate publicly traded companies. Some of the most innovative signals are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can outperform their index-focused peers by a significant margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Chuck Royce of Royce & Associates

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 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. Now let’s analyze the key hedge fund action encompassing LightPath Technologies, Inc. (NASDAQ:LPTH).

Do Hedge Funds Think LPTH 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 -20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LPTH over the last 23 quarters. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, AIGH Investment Partners, managed by Orin Hirschman, holds the largest position in LightPath Technologies, Inc. (NASDAQ:LPTH). AIGH Investment Partners has a $5.7 million position in the stock, comprising 1.2% of its 13F portfolio. Coming in second is Renaissance Technologies, holding a $4.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that hold long positions consist of Chuck Royce’s Royce & Associates, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position AIGH Investment Partners allocated the biggest weight to LightPath Technologies, Inc. (NASDAQ:LPTH), around 1.21% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to LPTH.

Judging by the fact that LightPath Technologies, Inc. (NASDAQ:LPTH) has witnessed falling interest from the aggregate hedge fund industry, we can see that there is a sect of money managers who were dropping their positions entirely in the first quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the biggest investment of all the hedgies watched by Insider Monkey, comprising close to $0.2 million in stock. Ken Griffin’s fund, Citadel Investment Group, also cut its stock, about $0.1 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 1 funds in the first quarter.

Let’s also examine hedge fund activity in other stocks similar to LightPath Technologies, Inc. (NASDAQ:LPTH). These stocks are Capital Senior Living Corporation (NYSE:CSU), BP Prudhoe Bay Royalty Trust (NYSE:BPT), Tuanche Limited (NASDAQ:TC), Great Elm Capital Corp. (NASDAQ:GECC), FedNat Holding Co (NASDAQ:FNHC), Entasis Therapeutics Holdings Inc. (NASDAQ:ETTX), and InspireMD Inc (NASDAQ:NSPR). This group of stocks’ market caps are closest to LPTH’s market cap.

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As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $14 million in LPTH’s case. FedNat Holding Co (NASDAQ:FNHC) is the most popular stock in this table. On the other hand Capital Senior Living Corporation (NYSE:CSU) is the least popular one with only 2 bullish hedge fund positions. LightPath Technologies, Inc. (NASDAQ:LPTH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LPTH is 46.1. 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 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 beat the market again by 3.3 percentage points. Unfortunately LPTH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LPTH were disappointed as the stock returned -11% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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