Live Nation Entertainment, Inc. (LYV) Fell Out Of Favor With Hedge Funds

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 Live Nation Entertainment, Inc. (NYSE:LYV)? The smart money sentiment can provide an answer to this question.

Is Live Nation Entertainment, Inc. (NYSE:LYV) a buy, sell, or hold? The best stock pickers were taking a bearish view. The number of long hedge fund positions dropped by 9 in recent months. Live Nation Entertainment, Inc. (NYSE:LYV) was in 37 hedge funds’ portfolios at the end of March. The all time high for this statistic is 50. Our calculations also showed that LYV isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Jeffrey Tannenbaum of Fir Tree

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s go over the latest hedge fund action encompassing Live Nation Entertainment, Inc. (NYSE:LYV).

Do Hedge Funds Think LYV Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LYV over the last 23 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Among these funds, Akre Capital Management held the most valuable stake in Live Nation Entertainment, Inc. (NYSE:LYV), which was worth $463 million at the end of the fourth quarter. On the second spot was Select Equity Group which amassed $319.3 million worth of shares. Melvin Capital Management, Fir Tree, and Horizon Asset Management were 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 Emerson Point Capital allocated the biggest weight to Live Nation Entertainment, Inc. (NYSE:LYV), around 6.66% of its 13F portfolio. Columbus Point is also relatively very bullish on the stock, designating 4.94 percent of its 13F equity portfolio to LYV.

Due to the fact that Live Nation Entertainment, Inc. (NYSE:LYV) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of hedgies that elected to cut their full holdings in the first quarter. It’s worth mentioning that Philippe Laffont’s Coatue Management dropped the largest investment of all the hedgies watched by Insider Monkey, comprising close to $109.8 million in stock. Daniel Sundheim’s fund, D1 Capital Partners, also dropped its stock, about $65.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 9 funds in the first quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Live Nation Entertainment, Inc. (NYSE:LYV). We will take a look at Conagra Brands, Inc. (NYSE:CAG), United Airlines Holdings Inc (NASDAQ:UAL), Cheniere Energy, Inc. (NYSE:LNG), Amcor plc (NYSE:AMCR), Caesars Entertainment Inc. (NASDAQ:CZR), Affirm Holdings, Inc. (NASDAQ:AFRM), and Expeditors International of Washington, Inc. (NASDAQ:EXPD). This group of stocks’ market caps resemble LYV’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.3 hedge funds with bullish positions and the average amount invested in these stocks was $1006 million. That figure was $1325 million in LYV’s case. Caesars Entertainment Inc. (NASDAQ:CZR) is the most popular stock in this table. On the other hand Amcor plc (NYSE:AMCR) is the least popular one with only 17 bullish hedge fund positions. Live Nation Entertainment, Inc. (NYSE:LYV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LYV is 35.1. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on LYV, though not to the same extent, as the stock returned 9.4% since Q1 (through June 25th) and outperformed the market as well.

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Disclosure: None. This article was originally published at Insider Monkey.