How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Lindsay Corporation (NYSE:LNN).
Lindsay Corporation (NYSE:LNN) investors should pay attention to an increase in hedge fund sentiment lately. LNN was in 8 hedge funds’ portfolios at the end of September. There were 6 hedge funds in our database with LNN positions at the end of the previous quarter. Our calculations also showed that LNN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most investors, hedge funds are assumed to be slow, outdated investment tools of yesteryear. While there are over 8000 funds in operation at present, We hone in on the masters of this group, approximately 750 funds. These hedge fund managers manage the majority of all hedge funds’ total capital, and by paying attention to their top picks, Insider Monkey has deciphered several investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Chuck Royce of Royce & Associates
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the recent hedge fund action surrounding Lindsay Corporation (NYSE:LNN).
Hedge fund activity in Lindsay Corporation (NYSE:LNN)
At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in LNN a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Royce & Associates held the most valuable stake in Lindsay Corporation (NYSE:LNN), which was worth $82.1 million at the end of the third quarter. On the second spot was Impax Asset Management which amassed $81.5 million worth of shares. Renaissance Technologies, SG Capital Management, and GAMCO Investors 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 SG Capital Management allocated the biggest weight to Lindsay Corporation (NYSE:LNN), around 1.51% of its 13F portfolio. Impax Asset Management is also relatively very bullish on the stock, dishing out 1.06 percent of its 13F equity portfolio to LNN.
As aggregate interest increased, specific money managers were breaking ground themselves. SG Capital Management, managed by Ken Grossman and Glen Schneider, initiated the biggest position in Lindsay Corporation (NYSE:LNN). SG Capital Management had $8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.3 million position during the quarter. The only other fund with a new position in the stock is Benjamin A. Smith’s Laurion Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Lindsay Corporation (NYSE:LNN). These stocks are Meridian Bancorp, Inc. (NASDAQ:EBSB), Primoris Services Corporation (NASDAQ:PRIM), Sandstorm Gold Ltd. (NYSE:SAND), and NetGear, Inc. (NASDAQ:NTGR). This group of stocks’ market values are similar to LNN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EBSB | 10 | 88413 | -1 |
| PRIM | 13 | 28390 | 1 |
| SAND | 14 | 66333 | -1 |
| NTGR | 19 | 23465 | 8 |
| Average | 14 | 51650 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $193 million in LNN’s case. NetGear, Inc. (NASDAQ:NTGR) is the most popular stock in this table. On the other hand Meridian Bancorp, Inc. (NASDAQ:EBSB) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Lindsay Corporation (NYSE:LNN) is even less popular than EBSB. Hedge funds dodged a bullet by taking a bearish stance towards LNN. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately LNN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); LNN investors were disappointed as the stock returned -2.5% 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
