Lancaster Colony Corp. (LANC): Hedge Fund Sentiment Unchanged

At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

Lancaster Colony Corp. (NASDAQ:LANC) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 14 hedge funds’ portfolios at the end of the third quarter of 2016. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as National Instruments Corp (NASDAQ:NATI), PrivateBancorp Inc (NASDAQ:PVTB), and ViaSat, Inc. (NASDAQ:VSAT) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Africa Studio/Shutterstock.com

Keeping this in mind, let’s take a gander at the recent action surrounding Lancaster Colony Corp. (NASDAQ:LANC).

Hedge fund activity in Lancaster Colony Corp. (NASDAQ:LANC)

At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from the second quarter of 2016. On the other hand, there were a total of 13 hedge funds with a bullish position in LANC at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Jim Simons’ Renaissance Technologies, holds the most valuable position in Lancaster Colony Corp. (NASDAQ:LANC). According to regulatory filings, the fund has a $75.9 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Fisher Asset Management, led by Ken Fisher, holding a $53.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that hold long positions comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Donald Yacktman’s Yacktman Asset Management and Cliff Asness’s AQR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually cut their positions entirely. At the top of the heap, Ken Griffin’s Citadel Investment Group cut the largest stake of the 700 funds followed by Insider Monkey, worth close to $1.6 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund dumped about $0.7 million worth of ancaster Colony Corp. (NASDAQ:LANC) shares.

Let’s also examine hedge fund activity in other stocks similar to Lancaster Colony Corp. (NASDAQ:LANC). These stocks are National Instruments Corp (NASDAQ:NATI), PrivateBancorp Inc (NASDAQ:PVTB), ViaSat, Inc. (NASDAQ:VSAT), and HEALTHSOUTH Corp. (NYSE:HLS). This group of stocks’ market values are closest to LANC’s market value.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $836 million. That figure was $254 million in LANC’s case. National Instruments Corp (NASDAQ:NATI) is the most popular stock in this table. On the other hand ViaSat, Inc. (NASDAQ:VSAT) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Lancaster Colony Corp. (NASDAQ:LANC) is even less popular than VSAT. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: none.