Should I Buy Open Lending Corporation (LPRO)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Open Lending Corporation (NASDAQ:LPRO).

Open Lending Corporation (NASDAQ:LPRO) shareholders have witnessed an increase in hedge fund interest of late. Open Lending Corporation (NASDAQ:LPRO) was in 28 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 34. There were 24 hedge funds in our database with LPRO holdings at the end of June. Our calculations also showed that LPRO 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 we’re going to review the new hedge fund action regarding Open Lending Corporation (NASDAQ:LPRO).

Richard Driehaus of Driehaus CapitalRichard Driehaus

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

At third quarter’s end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LPRO over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Washington Harbour Partners held the most valuable stake in Open Lending Corporation (NASDAQ:LPRO), which was worth $104.7 million at the end of the third quarter. On the second spot was Point72 Asset Management which amassed $65.5 million worth of shares. Miura Global Management, Azora Capital, and Driehaus Capital 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 Washington Harbour Partners allocated the biggest weight to Open Lending Corporation (NASDAQ:LPRO), around 12.39% of its 13F portfolio. Collaborative Holdings Management is also relatively very bullish on the stock, earmarking 4.56 percent of its 13F equity portfolio to LPRO.

Consequently, some big names were breaking ground themselves. Renaissance Technologies, created the largest position in Open Lending Corporation (NASDAQ:LPRO). Renaissance Technologies had $15.5 million invested in the company at the end of the quarter. Allon Hellmann’s Full18 Capital also initiated a $2.6 million position during the quarter. The other funds with brand new LPRO positions are Jinghua Yan’s TwinBeech Capital, Greg Eisner’s Engineers Gate Manager, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s check out hedge fund activity in other stocks similar to Open Lending Corporation (NASDAQ:LPRO). These stocks are AppFolio Inc (NASDAQ:APPF), Amyris Inc (NASDAQ:AMRS), Cushman & Wakefield plc (NYSE:CWK), Qurate Retail, Inc. (NASDAQ:QRTEA), The Hain Celestial Group, Inc. (NASDAQ:HAIN), The Ensign Group, Inc. (NASDAQ:ENSG), and Lemonade, Inc. (NYSE:LMND). This group of stocks’ market valuations are closest to LPRO’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $401 million. That figure was $382 million in LPRO’s case. Qurate Retail, Inc. (NASDAQ:QRTEA) is the most popular stock in this table. On the other hand AppFolio Inc (NASDAQ:APPF) is the least popular one with only 15 bullish hedge fund positions. Open Lending Corporation (NASDAQ:LPRO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LPRO is 67.9. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 beat the market again by 5.1 percentage points. Unfortunately LPRO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LPRO were disappointed as the stock returned -38.6% since the end of September (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 many of these stocks already outperformed the market since 2019.

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