As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Lazard Ltd (NYSE:LAZ).
Lazard Ltd (NYSE:LAZ) was in 18 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 22. LAZ investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months. There were 19 hedge funds in our database with LAZ positions at the end of the first quarter. Our calculations also showed that LAZ isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
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 are checking out stock pitches like this emerging lithium stock. 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. 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. Keeping this in mind let’s take a gander at the key hedge fund action regarding Lazard Ltd (NYSE:LAZ).
Do Hedge Funds Think LAZ Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the first quarter of 2020. On the other hand, there were a total of 18 hedge funds with a bullish position in LAZ a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, John W. Rogers’s Ariel Investments has the most valuable position in Lazard Ltd (NYSE:LAZ), worth close to $346.5 million, accounting for 3.3% of its total 13F portfolio. Sitting at the No. 2 spot is Mason Hawkins of Southeastern Asset Management, with a $224.8 million position; the fund has 4.5% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish contain Ken Fisher’s Fisher Asset Management, Chuck Royce’s Royce & Associates and Jeremy Hosking’s Hosking Partners. In terms of the portfolio weights assigned to each position Southeastern Asset Management allocated the biggest weight to Lazard Ltd (NYSE:LAZ), around 4.52% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, earmarking 3.26 percent of its 13F equity portfolio to LAZ.
Since Lazard Ltd (NYSE:LAZ) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there is a sect of money managers who sold off their entire stakes heading into Q3. At the top of the heap, Allon Hellmann’s Full18 Capital dumped the largest investment of the “upper crust” of funds followed by Insider Monkey, totaling close to $6 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also cut its stock, about $4.7 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds heading into Q3.
Let’s now review hedge fund activity in other stocks similar to Lazard Ltd (NYSE:LAZ). We will take a look at The Ensign Group, Inc. (NASDAQ:ENSG), CareDx, Inc. (NASDAQ:CDNA), National Fuel Gas Company (NYSE:NFG), Air Lease Corp (NYSE:AL), RLI Corp. (NYSE:RLI), Blackstone Mortgage Trust Inc (NYSE:BXMT), and Antero Resources Corp (NYSE:AR). This group of stocks’ market values match LAZ’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENSG | 17 | 85581 | 4 |
| CDNA | 28 | 1019253 | 5 |
| NFG | 12 | 132151 | -4 |
| AL | 22 | 677778 | -5 |
| RLI | 15 | 195173 | 1 |
| BXMT | 12 | 185212 | -4 |
| AR | 33 | 841084 | 0 |
| Average | 19.9 | 448033 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.9 hedge funds with bullish positions and the average amount invested in these stocks was $448 million. That figure was $786 million in LAZ’s case. Antero Resources Corp (NYSE:AR) is the most popular stock in this table. On the other hand National Fuel Gas Company (NYSE:NFG) is the least popular one with only 12 bullish hedge fund positions. Lazard Ltd (NYSE:LAZ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LAZ is 42.8. 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 29.6% in 2021 through November 5th and still beat the market by 3.1 percentage points. A small number of hedge funds were also right about betting on LAZ as the stock returned 8% since the end of the second quarter (through 11/5) and outperformed the market by an even larger margin.
Follow Lazard Inc. (NYSE:LAZ)
Follow Lazard Inc. (NYSE:LAZ)
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Disclosure: None. This article was originally published at Insider Monkey.
