Is LORL A Good Stock To Buy According To Hedge Funds?

We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Loral Space & Communications Inc (NASDAQ:LORL) based on that data.

Is LORL a good stock to buy now? Loral Space & Communications Inc (NASDAQ:LORL) investors should be aware of an increase in activity from the world’s largest hedge funds recently. Loral Space & Communications Inc (NASDAQ:LORL) was in 21 hedge funds’ portfolios at the end of September. The all time high for this statistic is 25. 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 for a quick look at the top 5 stocks).

Video: 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 a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Mark Rachesky of MHR Fund 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 go over the recent hedge fund action encompassing Loral Space & Communications Inc (NASDAQ:LORL).

Do Hedge Funds Think LORL Is A Good Stock To Buy Now?

At the end of September, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the second quarter of 2020. On the other hand, there were a total of 19 hedge funds with a bullish position in LORL a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, MHR Fund Management was the largest shareholder of Loral Space & Communications Inc (NASDAQ:LORL), with a stake worth $156.1 million reported as of the end of September. Trailing MHR Fund Management was GAMCO Investors, which amassed a stake valued at $20.2 million. OZ Management, Hudson Bay Capital Management, and Highland Capital Management 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 12.45% of its 13F portfolio. North Run Capital is also relatively very bullish on the stock, dishing out 5.41 percent of its 13F equity portfolio to LORL.

As aggregate interest increased, some big names have been driving this bullishness. Rubric Capital Management, managed by David Rosen, established the biggest position in Loral Space & Communications Inc (NASDAQ:LORL). Rubric Capital Management had $3.3 million invested in the company at the end of the quarter. Jerome L. Simon’s Lonestar Capital Management also initiated a $2.5 million position during the quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Loral Space & Communications Inc (NASDAQ:LORL) but similarly valued. We will take a look at Anterix Inc. (NASDAQ:ATEX), Tutor Perini Corp (NYSE:TPC), Tenneco Inc (NYSE:TEN), Avita Medical, Inc. (NASDAQ:RCEL), Tanger Factory Outlet Centers Inc. (NYSE:SKT), Playa Hotels & Resorts N.V. (NASDAQ:PLYA), and Apogee Enterprises, Inc. (NASDAQ:APOG). This group of stocks’ market valuations are similar to LORL’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.4 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $239 million in LORL’s case. Tenneco Inc (NYSE:TEN) is the most popular stock in this table. On the other hand Avita Medical, Inc. (NASDAQ:RCEL) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Loral Space & Communications Inc (NASDAQ:LORL) is more popular among hedge funds. Our overall hedge fund sentiment score for LORL is 82.2. 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 returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on LORL as the stock returned 22.6% since the end of September (through 12/14) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

Disclosure: None. This article was originally published at Insider Monkey.