We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Limelight Networks, Inc. (NASDAQ:LLNW).
Is LLNW a good stock to buy? Limelight Networks, Inc. (NASDAQ:LLNW) was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 24. LLNW investors should pay attention to an increase in hedge fund sentiment of late. There were 8 hedge funds in our database with LLNW holdings at the end of March. Our calculations also showed that LLNW isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the 21st century investor’s toolkit there are several metrics investors employ to assess publicly traded companies. A duo of the most underrated metrics are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the best money managers can outclass their index-focused peers by a superb amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website .
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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 we’re going to take a glance at the latest hedge fund action regarding Limelight Networks, Inc. (NASDAQ:LLNW).
Do Hedge Funds Think LLNW Is A Good Stock To Buy Now?
At Q2’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in LLNW a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John Overdeck and David Siegel’s Two Sigma Advisors has the most valuable position in Limelight Networks, Inc. (NASDAQ:LLNW), worth close to $7 million, comprising less than 0.1%% of its total 13F portfolio. On Two Sigma Advisors’s heels is Engineers Gate Manager, led by Greg Eisner, holding a $1.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers that are bullish comprise Paul Marshall and Ian Wace’s Marshall Wace LLP, Ken Griffin’s Citadel Investment Group and Mario Gabelli’s GAMCO Investors. In terms of the portfolio weights assigned to each position Engineers Gate Manager allocated the biggest weight to Limelight Networks, Inc. (NASDAQ:LLNW), around 0.08% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to LLNW.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. ExodusPoint Capital, managed by Michael Gelband, created the most outsized position in Limelight Networks, Inc. (NASDAQ:LLNW). ExodusPoint Capital had $0.1 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $0.1 million investment in the stock during the quarter. The only other fund with a brand new LLNW position is Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s now review hedge fund activity in other stocks similar to Limelight Networks, Inc. (NASDAQ:LLNW). These stocks are FTS International, Inc. (NYSE:FTSI), Bluegreen Vacations Holding Corporation (NYSE:BVH), Ellomay Capital Ltd. (NYSE:ELLO), Avadel Pharmaceuticals plc (NASDAQ:AVDL), Quantum Corporation (NASDAQ:QMCO), Enterprise Bancorp, Inc (NASDAQ:EBTC), and Retractable Technologies, Inc. (NYSE:RVP). All of these stocks’ market caps match LLNW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FTSI | 6 | 61931 | -1 |
| BVH | 8 | 33262 | 2 |
| ELLO | 1 | 525 | 0 |
| AVDL | 16 | 108341 | 1 |
| QMCO | 17 | 42488 | 3 |
| EBTC | 2 | 987 | 0 |
| RVP | 7 | 9264 | 0 |
| Average | 8.1 | 36685 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.1 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $11 million in LLNW’s case. Quantum Corporation (NASDAQ:QMCO) is the most popular stock in this table. On the other hand Ellomay Capital Ltd. (NYSE:ELLO) is the least popular one with only 1 bullish hedge fund positions. Limelight Networks, Inc. (NASDAQ:LLNW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LLNW is 47.6. 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 25.7% in 2021 through September 27th and beat the market again by 6.2 percentage points. Unfortunately LLNW wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LLNW were disappointed as the stock returned -20.6% since the end of June (through 9/27) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
