Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. After several tireless days we have finished crunching the numbers from nearly 835 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of December 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards LG Display Co Ltd. (NYSE:LPL).
Hedge fund interest in LG Display Co Ltd. (NYSE:LPL) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare LPL to other stocks including Seaboard Corporation (NYSE:SEB), MGIC Investment Corporation (NYSE:MTG), and ONE Gas Inc (NYSE:OGS) to get a better sense of its popularity.
In the 21st century investor’s toolkit there are dozens of indicators market participants can use to evaluate publicly traded companies. Some of the most innovative indicators are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the top money managers can outpace their index-focused peers by a superb margin (see the details here).
Ken Griffin of Citadel Investment Group
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a look at the key hedge fund action encompassing LG Display Co Ltd. (NYSE:LPL).
What have hedge funds been doing with LG Display Co Ltd. (NYSE:LPL)?
At the end of the fourth quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 5 hedge funds with a bullish position in LPL a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds, Arrowstreet Capital held the most valuable stake in LG Display Co Ltd. (NYSE:LPL), which was worth $5.3 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $0.5 million worth of shares. ExodusPoint Capital was 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 Arrowstreet Capital allocated the biggest weight to LG Display Co Ltd. (NYSE:LPL), around 0.01% of its 13F portfolio. ExodusPoint Capital is also relatively very bullish on the stock, earmarking 0.0018 percent of its 13F equity portfolio to LPL.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: LMR Partners. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was ExodusPoint Capital).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as LG Display Co Ltd. (NYSE:LPL) but similarly valued. We will take a look at Seaboard Corporation (NYSE:SEB), MGIC Investment Corporation (NYSE:MTG), ONE Gas Inc (NYSE:OGS), and Helmerich & Payne, Inc. (NYSE:HP). This group of stocks’ market valuations match LPL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SEB | 18 | 153985 | 2 |
| MTG | 37 | 604228 | -4 |
| OGS | 16 | 66793 | -4 |
| HP | 33 | 633780 | 4 |
| Average | 26 | 364697 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $365 million. That figure was $6 million in LPL’s case. MGIC Investment Corporation (NYSE:MTG) is the most popular stock in this table. On the other hand ONE Gas Inc (NYSE:OGS) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks LG Display Co Ltd. (NYSE:LPL) is even less popular than OGS. Hedge funds dodged a bullet by taking a bearish stance towards LPL. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but managed to beat the market by 4.2 percentage points. Unfortunately LPL wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); LPL investors were disappointed as the stock returned -32.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
