Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Landcadia Holdings Inc. (NASDAQ:LCAHU) has seen an increase in hedge fund sentiment recently. LCAHU was in 14 hedge funds’ portfolios at the end of the third quarter of 2016. There were 12 hedge funds in our database with LCAHU positions at the end of the previous quarter. At the end of this article we will also compare LCAHU to other stocks including Easterly Acquisition Corp (NASDAQ:EACQ), Hovnanian Enterprises, Inc. (NYSE:HOV), and Trinity Place Holdings Inc. (NYSE:TPHS) to get a better sense of its popularity.
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.
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Keeping this in mind, we’re going to view the recent action encompassing Landcadia Holdings Inc. (NASDAQ:LCAHU).
What does the smart money think about Landcadia Holdings Inc. (NASDAQ:LCAHU)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, up 17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LCAHU over the last 5 quarters. So, let’s review 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, Nick Niell’s Arrowgrass Capital Partners has the most valuable position in Landcadia Holdings Inc. (NASDAQ:LCAHU), worth close to $20.5 million, corresponding to 0.3% of its total 13F portfolio. The second largest stake is held by Hudson Bay Capital Management, led by Sander Gerber, holding a $20.4 million position; 0.5% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism contain Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, Glenn Russell Dubin’s Highbridge Capital Management and Jeffrey Tannenbaum’s Fir Tree. We should note that Hudson Bay Capital Management is 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.
As one would reasonably expect, some big names were leading the bulls’ herd. Fir Tree initiated the most valuable position in Landcadia Holdings Inc. (NASDAQ:LCAHU). According to its latest 13F filing, the fund had $14.7 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also made an $11.9 million investment in the stock during the quarter. The following funds were also among the new LCAHU investors: Anand Parekh’s Alyeska Investment Group and Neil Chriss’ Hutchin Hill Capital.
Let’s also examine hedge fund activity in other stocks similar to Landcadia Holdings Inc. (NASDAQ:LCAHU). These stocks are Easterly Acquisition Corp (NASDAQ:EACQ), Hovnanian Enterprises, Inc. (NYSE:HOV), Trinity Place Holdings Inc. (NYSE:TPHS), and BankFinancial Corporation (NASDAQ:BFIN). This group of stocks’ market valuations are similar to LCAHU’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EACQ | 11 | 78069 | 0 |
| HOV | 10 | 13243 | 1 |
| TPHS | 4 | 83372 | 0 |
| BFIN | 4 | 9775 | -1 |
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $159 million in LCAHU’s case. Easterly Acquisition Corp (NASDAQ:EACQ) is the most popular stock in this table. On the other hand Trinity Place Holdings Inc. (NYSE:TPHS) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Landcadia Holdings Inc. (NASDAQ:LCAHU) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: none.