“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Loral Space & Communications Inc. (NASDAQ:LORL) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Is Loral Space & Communications Inc. (NASDAQ:LORL) a buy, sell, or hold? The best stock pickers are turning bullish. The number of bullish hedge fund positions went up by 2 in recent months. Our calculations also showed that LORL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). LORL was in 18 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with LORL 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.
In the 21st century investor’s toolkit there are tons of tools market participants have at their disposal to grade their stock investments. Two of the best tools are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can outperform the broader indices by a superb amount (see the details here).
Mark Rachesky of MHR Fund Management
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. Let’s take a look at the recent hedge fund action regarding Loral Space & Communications Inc. (NASDAQ:LORL).
What have hedge funds been doing with Loral Space & Communications Inc. (NASDAQ:LORL)?
At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in LORL over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
More specifically, MHR Fund Management was the largest shareholder of Loral Space & Communications Inc. (NASDAQ:LORL), with a stake worth $353.1 million reported as of the end of September. Trailing MHR Fund Management was Highland Capital Management, which amassed a stake valued at $86.3 million. Solus Alternative Asset Management, GAMCO Investors, and Sculptor 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 MHR Fund Management allocated the biggest weight to Loral Space & Communications Inc. (NASDAQ:LORL), around 29.91% of its 13F portfolio. Solus Alternative Asset Management is also relatively very bullish on the stock, earmarking 14.96 percent of its 13F equity portfolio to LORL.
As industrywide interest jumped, some big names have been driving this bullishness. Winton Capital Management, managed by David Harding, created the most outsized position in Loral Space & Communications Inc. (NASDAQ:LORL). Winton Capital Management had $2.5 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.4 million investment in the stock during the quarter. The following funds were also among the new LORL investors: Cliff Asness’s AQR Capital Management, Rob Citrone’s Discovery Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace.
Let’s now take a look at hedge fund activity in other stocks similar to Loral Space & Communications Inc. (NASDAQ:LORL). These stocks are Audentes Therapeutics, Inc. (NASDAQ:BOLD), Sykes Enterprises, Incorporated (NASDAQ:SYKE), Boise Cascade Co (NYSE:BCC), and Shutterstock Inc (NYSE:SSTK). This group of stocks’ market valuations are similar to LORL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BOLD | 25 | 486348 | -2 |
| SYKE | 13 | 71749 | -2 |
| BCC | 13 | 52582 | 2 |
| SSTK | 15 | 79364 | -3 |
| Average | 16.5 | 172511 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $173 million. That figure was $606 million in LORL’s case. Audentes Therapeutics, Inc. (NASDAQ:BOLD) is the most popular stock in this table. On the other hand Sykes Enterprises, Incorporated (NASDAQ:SYKE) is the least popular one with only 13 bullish hedge fund positions. Loral Space & Communications Inc. (NASDAQ:LORL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately LORL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on LORL were disappointed as the stock returned -18.2% 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
