The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Livent Corporation (NYSE:LTHM).
Is LTHM a good stock to buy now? Livent Corporation (NYSE:LTHM) was in 20 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 25. LTHM investors should be aware of an increase in hedge fund interest of late. There were 19 hedge funds in our database with LTHM holdings at the end of June. Our calculations also showed that LTHM 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.
Anna Nikolayevsky of Axel Capital
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. With all of this in mind let’s take a look at the new hedge fund action surrounding Livent Corporation (NYSE:LTHM).
Do Hedge Funds Think LTHM Is A Good Stock To Buy Now?
At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LTHM over the last 21 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Joho Capital was the largest shareholder of Livent Corporation (NYSE:LTHM), with a stake worth $26.5 million reported as of the end of September. Trailing Joho Capital was Royce & Associates, which amassed a stake valued at $11 million. Adage Capital Management, Millennium Management, and Citadel Investment Group 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 Joho Capital allocated the biggest weight to Livent Corporation (NYSE:LTHM), around 5.36% of its 13F portfolio. Jade Capital Advisors is also relatively very bullish on the stock, dishing out 0.45 percent of its 13F equity portfolio to LTHM.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Adage Capital Management, managed by Phill Gross and Robert Atchinson, initiated the most valuable position in Livent Corporation (NYSE:LTHM). Adage Capital Management had $7.2 million invested in the company at the end of the quarter. Anna Nikolayevsky’s Axel Capital Management also initiated a $0.7 million position during the quarter. The other funds with brand new LTHM positions are Warren Lammert’s Granite Point Capital, Minhua Zhang’s Weld Capital Management, and Bruce Kovner’s Caxton Associates LP.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Livent Corporation (NYSE:LTHM) but similarly valued. We will take a look at The Providence Service Corporation (NASDAQ:PRSC), Glu Mobile Inc. (NASDAQ:GLUU), Capitol Federal Financial, Inc. (NASDAQ:CFFN), Coherus Biosciences Inc (NASDAQ:CHRS), Piper Sandler Companies (NYSE:PIPR), Service Properties Trust (NASDAQ:SVC), and Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL). This group of stocks’ market valuations match LTHM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRSC | 15 | 320755 | 3 |
| GLUU | 26 | 169466 | -9 |
| CFFN | 14 | 80710 | 3 |
| CHRS | 24 | 224914 | -2 |
| PIPR | 14 | 45238 | 1 |
| SVC | 15 | 79288 | -6 |
| ZNTL | 14 | 599791 | 3 |
| Average | 17.4 | 217166 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $217 million. That figure was $61 million in LTHM’s case. Glu Mobile Inc. (NASDAQ:GLUU) is the most popular stock in this table. On the other hand Capitol Federal Financial, Inc. (NASDAQ:CFFN) is the least popular one with only 14 bullish hedge fund positions. Livent Corporation (NYSE:LTHM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LTHM is 55. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on LTHM as the stock returned 79.6% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Livent Corp. (NYSE:LTHM)
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Disclosure: None. This article was originally published at Insider Monkey.
