Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds and investors’ positions as of the end of the third quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Lions Gate Entertainment Corporation (NYSE:LGF-B) based on that data.
Is Lions Gate Entertainment Corporation (NYSE:LGF-B) a superb stock to buy now? The smart money is taking a bearish view. The number of long hedge fund positions fell by 1 recently. Our calculations also showed that LGF-B isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 18 percentage points since May 2014 through December 3, 2018 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to take a gander at the fresh hedge fund action regarding Lions Gate Entertainment Corporation (NYSE:LGF-B).
How have hedgies been trading Lions Gate Entertainment Corporation (NYSE:LGF-B)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the second quarter of 2018. On the other hand, there were a total of 17 hedge funds with a bullish position in LGF-B at the beginning of this year. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, MHR Fund Management, managed by Mark Rachesky, holds the most valuable position in Lions Gate Entertainment Corporation (NYSE:LGF-B). MHR Fund Management has a $352 million position in the stock, comprising 18.8% of its 13F portfolio. Sitting at the No. 2 spot is Murray Stahl of Horizon Asset Management, with a $35 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism encompass Joshua Kaufman and Craig Nerenberg’s Brenner West Capital Partners, Ken Griffin’s Citadel Investment Group and Jim Simons’s Renaissance Technologies.
Since Lions Gate Entertainment Corporation (NYSE:LGF-B) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of funds that decided to sell off their full holdings in the third quarter. Intriguingly, Michael Platt and William Reeves’s BlueCrest Capital Mgmt. dumped the biggest position of the “upper crust” of funds monitored by Insider Monkey, valued at close to $3.5 million in stock, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners was right behind this move, as the fund sold off about $3.4 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 1 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Lions Gate Entertainment Corporation (NYSE:LGF-B). These stocks are Euronet Worldwide, Inc. (NASDAQ:EEFT), EPR Properties (NYSE:EPR), New York Community Bancorp, Inc. (NYSE:NYCB), and VEON Ltd. (NASDAQ:VEON). This group of stocks’ market valuations match LGF-B’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EEFT | 24 | 213065 | 6 |
| EPR | 13 | 56577 | 1 |
| NYCB | 12 | 66274 | 0 |
| VEON | 7 | 18060 | -3 |
| Average | 14 | 88494 | 1 |
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 $88 million. That figure was $478 million in LGF-B’s case. Euronet Worldwide, Inc. (NASDAQ:EEFT) is the most popular stock in this table. On the other hand VEON Ltd. (NASDAQ:VEON) is the least popular one with only 7 bullish hedge fund positions. Lions Gate Entertainment Corporation (NYSE:LGF-B) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard EEFT might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
