Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Lendingtree Inc (NASDAQ:TREE) .
Follow Lendingtree Inc. (NASDAQ:TREE)
Follow Lendingtree Inc. (NASDAQ:TREE)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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What have hedge funds been doing with Lendingtree Inc (NASDAQ:TREE)?
Heading into the fourth quarter of 2016, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from one quarter earlier. On the other hand, there were a total of 29 hedge funds with a bullish position in TREE at the beginning of this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Coatue Management, led by Philippe Laffont, holds the most valuable position in Lendingtree Inc (NASDAQ:TREE). Coatue Management has a $45.6 million position in the stock. The second most bullish fund manager is Alyeska Investment Group, led by Anand Parekh, which holds an $18.2 million position. Other professional money managers with similar optimism comprise Eric Semler’s TCS Capital Management and Ryan Frick and Oliver Evans’ Dorsal Capital Management. We should note that Dorsal Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually cashed in their positions entirely. Interestingly, John Burbank’s Passport Capital cashed in the biggest position of the 700 funds watched by Insider Monkey, totaling an estimated $23.9 million in call options, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund sold off about $7.2 million worth of shares.
Let’s also examine hedge fund activity in other stocks similar to Lendingtree Inc (NASDAQ:TREE). We will take a look at GasLog Ltd (NYSE:GLOG), Benchmark Electronics, Inc. (NYSE:BHE), Cato Corp (NYSE:CATO), and Universal Electronics Inc (NASDAQ:UEIC). This group of stocks’ market caps resemble TREE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GLOG | 9 | 41618 | 0 |
| BHE | 17 | 157165 | 1 |
| CATO | 11 | 81751 | -4 |
| UEIC | 9 | 29656 | 1 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $110 million in TREE’s case. Benchmark Electronics, Inc. (NYSE:BHE) is the most popular stock in this table. On the other hand GasLog Ltd (NYSE:GLOG) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Lendingtree Inc (NASDAQ:TREE) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
