The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about LINE Corporation (NYSE:LN)?
Is LINE Corporation (NYSE:LN) a bargain? Money managers are turning less bullish. The number of bullish hedge fund positions decreased by 6 in recent months. Our calculations also showed that LN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). LN was in 7 hedge funds’ portfolios at the end of the first quarter of 2020. There were 13 hedge funds in our database with LN holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most stock holders, hedge funds are seen as worthless, old investment vehicles of the past. While there are greater than 8000 funds with their doors open at present, Our experts choose to focus on the top tier of this club, around 850 funds. Most estimates calculate that this group of people oversee the lion’s share of the hedge fund industry’s total asset base, and by keeping an eye on their finest stock picks, Insider Monkey has figured out many investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Lei Zhang of Hillhouse Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to go over the new hedge fund action regarding LINE Corporation (NYSE:LN).
What have hedge funds been doing with LINE Corporation (NYSE:LN)?
At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -46% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in LN over the last 18 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
The largest stake in LINE Corporation (NYSE:LN) was held by Hillhouse Capital Management, which reported holding $41.9 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $7.7 million position. Other investors bullish on the company included Millennium Management, CSat Investment Advisory, and D E Shaw. In terms of the portfolio weights assigned to each position CSat Investment Advisory allocated the biggest weight to LINE Corporation (NYSE:LN), around 0.62% of its 13F portfolio. Hillhouse Capital Management is also relatively very bullish on the stock, designating 0.57 percent of its 13F equity portfolio to LN.
Seeing as LINE Corporation (NYSE:LN) has faced bearish sentiment from hedge fund managers, logic holds that there is a sect of fund managers that slashed their full holdings by the end of the first quarter. Intriguingly, Shane Finemore’s Manikay Partners dumped the largest stake of all the hedgies monitored by Insider Monkey, valued at an estimated $13 million in stock, and Brett Barakett’s Tremblant Capital was right behind this move, as the fund cut about $5.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 6 funds by the end of the first quarter.
Let’s go over hedge fund activity in other stocks similar to LINE Corporation (NYSE:LN). These stocks are Credicorp Ltd. (NYSE:BAP), Waters Corporation (NYSE:WAT), Teladoc Health, Inc (NYSE:TDOC), and West Pharmaceutical Services Inc. (NYSE:WST). This group of stocks’ market caps are similar to LN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BAP | 22 | 193610 | 0 |
| WAT | 25 | 337327 | -2 |
| TDOC | 36 | 532644 | 13 |
| WST | 27 | 346802 | -2 |
| Average | 27.5 | 352596 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.5 hedge funds with bullish positions and the average amount invested in these stocks was $353 million. That figure was $59 million in LN’s case. Teladoc Health, Inc (NYSE:TDOC) is the most popular stock in this table. On the other hand Credicorp Ltd. (NYSE:BAP) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks LINE Corporation (NYSE:LN) is even less popular than BAP. Hedge funds dodged a bullet by taking a bearish stance towards LN. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. Unfortunately LN wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); LN investors were disappointed as the stock returned 3.5% during the second quarter (through June 10th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
