In this article you are going to find out whether hedge funds think Li-Cycle Holdings Corp. (NYSE:LICY) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Li-Cycle Holdings Corp. (NYSE:LICY) ready to rally soon? Investors who are in the know were getting more bullish. The number of long hedge fund bets went up by 28 recently. Li-Cycle Holdings Corp. (NYSE:LICY) was in 28 hedge funds’ portfolios at the end of September. Our calculations also showed that LICY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s check out the key hedge fund action regarding Li-Cycle Holdings Corp. (NYSE:LICY).
Zilvinas Mecelis of Covalis Capital
Do Hedge Funds Think LICY Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 28 from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in LICY over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Louis Bacon’s Moore Global Investments has the number one position in Li-Cycle Holdings Corp. (NYSE:LICY) , worth close to $58.5 million, comprising 0.9% of its total 13F portfolio. The second largest stake is held by Covalis Capital, managed by Zilvinas Mecelis, which holds a $33.6 million position; the fund has 7.8% of its 13F portfolio invested in the stock. Other peers with similar optimism consist of Peter S. Park’s Park West Asset Management, Himanshu Gulati’s Antara Capital and Mubadala Investment’s MIC Capital Partners. In terms of the portfolio weights assigned to each position Covalis Capital allocated the biggest weight to Li-Cycle Holdings Corp. (NYSE:LICY) , around 7.77% of its 13F portfolio. MIC Capital Partners is also relatively very bullish on the stock, setting aside 3.22 percent of its 13F equity portfolio to LICY.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Moore Global Investments, managed by Louis Bacon, initiated the biggest position in Li-Cycle Holdings Corp. (NYSE:LICY) . Moore Global Investments had $58.5 million invested in the company at the end of the quarter. Zilvinas Mecelis’s Covalis Capital also initiated a $33.6 million position during the quarter. The other funds with new positions in the stock are Peter S. Park’s Park West Asset Management, Himanshu Gulati’s Antara Capital, and Mubadala Investment’s MIC Capital Partners.
Let’s check out hedge fund activity in other stocks similar to Li-Cycle Holdings Corp. (NYSE:LICY) . We will take a look at Silk Road Medical, Inc. (NASDAQ:SILK), Banner Corporation (NASDAQ:BANR), Grid Dynamics Holdings, Inc. (NASDAQ:GDYN), Xencor Inc (NASDAQ:XNCR), Sally Beauty Holdings, Inc. (NYSE:SBH), Ultra Clean Holdings Inc (NASDAQ:UCTT), and Genworth Financial Inc (NYSE:GNW). This group of stocks’ market valuations are closest to LICY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SILK | 16 | 110886 | 3 |
| BANR | 12 | 42902 | 1 |
| GDYN | 18 | 201558 | 3 |
| XNCR | 17 | 203181 | 0 |
| SBH | 21 | 106365 | -1 |
| UCTT | 19 | 132538 | -6 |
| GNW | 23 | 130883 | 3 |
| Average | 18 | 132616 | 0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $290 million in LICY’s case. Genworth Financial Inc (NYSE:GNW) is the most popular stock in this table. On the other hand Banner Corporation (NASDAQ:BANR) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Li-Cycle Holdings Corp. (NYSE:LICY) is more popular among hedge funds. Our overall hedge fund sentiment score for LICY is 90. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Unfortunately LICY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LICY were disappointed as the stock returned 1.3% since the end of the third quarter (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.