Before we spend days researching a stock idea we like to take a look at how hedge funds and billionaire investors recently traded that stock. Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of the third quarter of 2018. This means hedge funds that are allocating a higher percentage of their portfolio to small-cap stocks were probably underperforming the market. However, this also means that as small-cap stocks start to mean revert, these hedge funds will start delivering better returns than the S&P 500 Index funds. In this article, we will take a look at what hedge funds think about LogMeIn Inc (NASDAQ:LOGM).
Is LogMeIn Inc (NASDAQ:LOGM) a buy here? Hedge funds are taking a bullish view. The number of bullish hedge fund positions moved up by 2 recently. Our calculations also showed that LOGM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). LOGM was in 29 hedge funds’ portfolios at the end of September. There were 27 hedge funds in our database with LOGM holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jeffrey Bronchick of Cove Street Capital
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a gander at the new hedge fund action regarding LogMeIn Inc (NASDAQ:LOGM).
Hedge fund activity in LogMeIn Inc (NASDAQ:LOGM)
Heading into the fourth quarter of 2019, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LOGM over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the most valuable position in LogMeIn Inc (NASDAQ:LOGM). Renaissance Technologies has a $56.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is GLG Partners, managed by Noam Gottesman, which holds a $53.8 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish comprise David E. Shaw’s D E Shaw, Cliff Asness’s AQR Capital Management and Jeffrey Bronchick’s Cove Street Capital. In terms of the portfolio weights assigned to each position Cove Street Capital allocated the biggest weight to LogMeIn Inc (NASDAQ:LOGM), around 2.55% of its portfolio. Lonestar Capital Management is also relatively very bullish on the stock, designating 2.35 percent of its 13F equity portfolio to LOGM.
As one would reasonably expect, specific money managers have jumped into LogMeIn Inc (NASDAQ:LOGM) headfirst. Cove Street Capital, managed by Jeffrey Bronchick, established the largest position in LogMeIn Inc (NASDAQ:LOGM). Cove Street Capital had $18.2 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $10.7 million position during the quarter. The other funds with new positions in the stock are Michael Hintze’s CQS Cayman LP, Michael Gelband’s ExodusPoint Capital, and Donald Sussman’s Paloma Partners.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as LogMeIn Inc (NASDAQ:LOGM) but similarly valued. We will take a look at United Therapeutics Corporation (NASDAQ:UTHR), Univar Solutions Inc. (NYSE:UNVR), Medallia, Inc. (NYSE:MDLA), and Bank of Hawaii Corporation (NYSE:BOH). This group of stocks’ market valuations match LOGM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UTHR | 30 | 1131522 | 0 |
| UNVR | 37 | 1331993 | 6 |
| MDLA | 23 | 250641 | 23 |
| BOH | 13 | 104848 | 1 |
| Average | 25.75 | 704751 | 7.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $705 million. That figure was $295 million in LOGM’s case. Univar Solutions Inc. (NYSE:UNVR) is the most popular stock in this table. On the other hand Bank of Hawaii Corporation (NYSE:BOH) is the least popular one with only 13 bullish hedge fund positions. LogMeIn Inc (NASDAQ:LOGM) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on LOGM, though not to the same extent, as the stock returned 10.4% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
