The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded LPL Financial Holdings Inc (NASDAQ:LPLA) based on those filings.
LPL Financial Holdings Inc (NASDAQ:LPLA) shareholders have witnessed an increase in enthusiasm from smart money of late. LPL Financial Holdings Inc (NASDAQ:LPLA) was in 48 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 43. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that LPLA isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 79 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.
Robert Pohly of Samlyn Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining 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. Now let’s go over the recent hedge fund action encompassing LPL Financial Holdings Inc (NASDAQ:LPLA).
Do Hedge Funds Think LPLA Is A Good Stock To Buy Now?
At Q2’s end, a total of 48 of the hedge funds tracked by Insider Monkey were long this stock, a change of 26% from one quarter earlier. On the other hand, there were a total of 43 hedge funds with a bullish position in LPLA a year ago. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Robert Pohly’s Samlyn Capital has the number one position in LPL Financial Holdings Inc (NASDAQ:LPLA), worth close to $343.7 million, comprising 5% of its total 13F portfolio. The second largest stake is held by Southpoint Capital Advisors, led by John Smith Clark, holding a $202.5 million position; the fund has 3.5% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions consist of Parag Vora’s HG Vora Capital Management, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Engle Capital allocated the biggest weight to LPL Financial Holdings Inc (NASDAQ:LPLA), around 10.22% of its 13F portfolio. HG Vora Capital Management is also relatively very bullish on the stock, designating 6.09 percent of its 13F equity portfolio to LPLA.
As one would reasonably expect, some big names have jumped into LPL Financial Holdings Inc (NASDAQ:LPLA) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, established the most outsized position in LPL Financial Holdings Inc (NASDAQ:LPLA). Balyasny Asset Management had $52.1 million invested in the company at the end of the quarter. Ryan Caldwell’s Chiron Investment Management also initiated a $30.3 million position during the quarter. The other funds with new positions in the stock are Ira Unschuld’s Brant Point Investment Management, Renaissance Technologies, and Gregg Moskowitz’s Interval Partners.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as LPL Financial Holdings Inc (NASDAQ:LPLA) but similarly valued. These stocks are Gaming and Leisure Properties Inc (NASDAQ:GLPI), Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), Cleveland-Cliffs Inc (NYSE:CLF), Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI), Marathon Oil Corporation (NYSE:MRO), PRA Health Sciences Inc (NASDAQ:PRAH), and The Scotts Miracle-Gro Company (NYSE:SMG). All of these stocks’ market caps are similar to LPLA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GLPI | 27 | 515879 | -1 |
| JAZZ | 34 | 1493732 | -3 |
| CLF | 44 | 1111037 | 8 |
| MRVI | 20 | 572985 | -6 |
| MRO | 34 | 655729 | 5 |
| PRAH | 43 | 2995527 | 8 |
| SMG | 32 | 369779 | -2 |
| Average | 33.4 | 1102095 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.4 hedge funds with bullish positions and the average amount invested in these stocks was $1102 million. That figure was $1501 million in LPLA’s case. Cleveland-Cliffs Inc (NYSE:CLF) is the most popular stock in this table. On the other hand Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks LPL Financial Holdings Inc (NASDAQ:LPLA) is more popular among hedge funds. Our overall hedge fund sentiment score for LPLA is 90. 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 returned 29.6% in 2021 through November 5th but still managed to beat the market by 3.1 percentage points. Hedge funds were also right about betting on LPLA as the stock returned 24.8% since the end of June (through 11/5) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
