Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles 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 over the last 5 years and analyze what the smart money thinks of Landec Corporation (NASDAQ:LNDC) based on that data.
Is LNDC a good stock to buy now? Landec Corporation (NASDAQ:LNDC) has experienced a decrease in support from the world’s most elite money managers lately. Landec Corporation (NASDAQ:LNDC) was in 14 hedge funds’ portfolios at the end of September. The all time high for this statistic is 15. Our calculations also showed that LNDC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Christopher Kiper of Legion Partners Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now let’s take a glance at the key hedge fund action regarding Landec Corporation (NASDAQ:LNDC).
Do Hedge Funds Think LNDC Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LNDC over the last 21 quarters. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
More specifically, Legion Partners Asset Management was the largest shareholder of Landec Corporation (NASDAQ:LNDC), with a stake worth $28.2 million reported as of the end of September. Trailing Legion Partners Asset Management was Wynnefield Capital, which amassed a stake valued at $27.9 million. Cove Street Capital, Harbert Management, and AltraVue Capital 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 Wynnefield Capital allocated the biggest weight to Landec Corporation (NASDAQ:LNDC), around 17.4% of its 13F portfolio. Legion Partners Asset Management is also relatively very bullish on the stock, earmarking 6.76 percent of its 13F equity portfolio to LNDC.
Because Landec Corporation (NASDAQ:LNDC) has experienced falling interest from the smart money, it’s safe to say that there is a sect of hedge funds that decided to sell off their full holdings by the end of the third quarter. It’s worth mentioning that Michael Gelband’s ExodusPoint Capital sold off the largest investment of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $0.3 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund said goodbye to about $0.1 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Landec Corporation (NASDAQ:LNDC) but similarly valued. We will take a look at Itamar Medical Ltd. (NASDAQ:ITMR), Biglari Holdings Inc (NYSE:BH), Heritage Insurance Holdings Inc (NYSE:HRTG), SunCoke Energy, Inc (NYSE:SXC), Digimarc Corp (NASDAQ:DMRC), Paysign, Inc. (NASDAQ:PAYS), and TravelCenters of America Inc. (NASDAQ:TA). This group of stocks’ market valuations are closest to LNDC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ITMR | 9 | 38617 | -1 |
| BH | 9 | 26358 | -3 |
| HRTG | 11 | 29862 | -1 |
| SXC | 19 | 61420 | 0 |
| DMRC | 6 | 26173 | -1 |
| PAYS | 5 | 9896 | 0 |
| TA | 12 | 62213 | 5 |
| Average | 10.1 | 36363 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.1 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $74 million in LNDC’s case. SunCoke Energy, Inc (NYSE:SXC) is the most popular stock in this table. On the other hand Paysign, Inc. (NASDAQ:PAYS) is the least popular one with only 5 bullish hedge fund positions. Landec Corporation (NASDAQ:LNDC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LNDC is 64.1. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on LNDC as the stock returned 15.4% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
