Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Limoneira Company (NASDAQ:LMNR)? The smart money sentiment can provide an answer to this question.
Limoneira Company (NASDAQ:LMNR) has experienced an increase in enthusiasm from smart money lately. LMNR was in 6 hedge funds’ portfolios at the end of the third quarter of 2018. There were 4 hedge funds in our database with LMNR positions at the end of the previous quarter. Our calculations also showed that LMNR isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s take a glance at the latest hedge fund action encompassing Limoneira Company (NASDAQ:LMNR).
How have hedgies been trading Limoneira Company (NASDAQ:LMNR)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards LMNR over the last 13 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Limoneira Company (NASDAQ:LMNR) was held by Driehaus Capital, which reported holding $10.7 million worth of stock at the end of September. It was followed by Marshall Wace LLP with a $3.3 million position. Other investors bullish on the company included Renaissance Technologies, Millennium Management, and Alyeska Investment Group.
As aggregate interest increased, some big names were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the most outsized position in Limoneira Company (NASDAQ:LMNR). Marshall Wace LLP had $3.3 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $0.3 million position during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Limoneira Company (NASDAQ:LMNR). These stocks are TG Therapeutics Inc (NASDAQ:TGTX), Merus N.V. (NASDAQ:MRUS), New Gold Inc. (NYSEAMEX:NGD), and Dermira Inc (NASDAQ:DERM). This group of stocks’ market caps resemble LMNR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TGTX | 19 | 113340 | 1 |
| MRUS | 6 | 104782 | 1 |
| NGD | 14 | 47687 | 0 |
| DERM | 17 | 88394 | 0 |
| Average | 14 | 88551 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $20 million in LMNR’s case. TG Therapeutics Inc (NASDAQ:TGTX) is the most popular stock in this table. On the other hand Merus N.V. (NASDAQ:MRUS) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Limoneira Company (NASDAQ:LMNR) is even less popular than MRUS. 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. This article was originally published at Insider Monkey.
