LegacyTexas Financial Group Inc (LTXB): Why Are Hedge Funds Snapping Up This Stock?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on LegacyTexas Financial Group Inc (NASDAQ:LTXB).

LegacyTexas Financial Group Inc (NASDAQ:LTXB) has experienced an increase in hedge fund interest recently. 17 hedge funds that we track were long the stock on September 30. There were 13 hedge funds in our database with LTXB positions at the end of the previous quarter. 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 YY Inc (ADR) (NASDAQ:YY), KB Home (NYSE:KBH), and Neustar Inc (NYSE:NSR) 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.

Kevin George/Shutterstock.com

What have hedge funds been doing with LegacyTexas Financial Group Inc (NASDAQ:LTXB)?

Heading into the fourth quarter of 2016, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 31% boost from one quarter earlier. On the other hand, there were a total of just 12 hedge funds with a bullish position in LTXB at the beginning of this year, as hedge funds have piled into the stock in 2016. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Jim Simons’ Renaissance Technologies has the largest position in LegacyTexas Financial Group Inc (NASDAQ:LTXB), worth close to $32.8 million. Sitting at the No. 2 spot is Millennium Management, founded by Israel Englander, holding a $25.4 million position. Other professional money managers that hold long positions consist of Ken Griffin’s Citadel Investment Group, Sharif Siddiqui’s Alpenglow Capital, and William Black’s Consector Capital. 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.

Consequently, key hedge funds have jumped into LegacyTexas Financial Group Inc (NASDAQ:LTXB) headfirst. Alpenglow Capital assembled the most valuable position in LegacyTexas Financial Group Inc (NASDAQ:LTXB). Alpenglow Capital had $3.1 million invested in the company at the end of the quarter. Solomon Kumin’s Folger Hill Asset Management also initiated a $2.5 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Glenn Russell Dubin’s Highbridge Capital Management, and Michael Platt and William Reeves’ BlueCrest Capital Mgmt..

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as LegacyTexas Financial Group Inc (NASDAQ:LTXB) but similarly valued. We will take a look at YY Inc (ADR) (NASDAQ:YY), KB Home (NYSE:KBH), Neustar Inc (NYSE:NSR), and Albany International Corp. (NYSE:AIN). This group of stocks’ market valuations match LTXB’s market valuation.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $211 million. That figure was $85 million in LTXB’s case. YY Inc (ADR) (NASDAQ:YY) is the most popular stock in this table. On the other hand Albany International Corp. (NYSE:AIN) is the least popular one with only 11 bullish hedge fund positions. LegacyTexas Financial Group Inc (NASDAQ:LTXB) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard YY might be a better candidate to consider taking a long position in.

Disclosure: None