Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the second quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 20 stock picks outperformed the S&P 500 Index by 6.6 percentage points through May 30th. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Lamb Weston Holdings, Inc. (NYSE:LW) shareholders have witnessed an increase in support from the world’s most elite money managers recently. LW was in 41 hedge funds’ portfolios at the end of the first quarter of 2019. There were 32 hedge funds in our database with LW holdings at the end of the previous quarter. Our calculations also showed that lw isn’t among the 30 most popular stocks among hedge funds.
Today there are dozens of metrics shareholders employ to appraise stocks. A couple of the best metrics are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can trounce the broader indices by a significant margin (see the details here).
We’re going to check out the latest hedge fund action encompassing Lamb Weston Holdings, Inc. (NYSE:LW).
What have hedge funds been doing with Lamb Weston Holdings, Inc. (NYSE:LW)?
At the end of the first quarter, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 28% from the fourth quarter of 2018. On the other hand, there were a total of 34 hedge funds with a bullish position in LW a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Lamb Weston Holdings, Inc. (NYSE:LW), with a stake worth $153.9 million reported as of the end of March. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $148.1 million. Millennium Management, D E Shaw, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, some big names have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, established the biggest call position in Lamb Weston Holdings, Inc. (NYSE:LW). Point72 Asset Management had $34.5 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $29.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Leon Shaulov’s Maplelane Capital, Anand Parekh’s Alyeska Investment Group, and Mark Kingdon’s Kingdon Capital.
Let’s go over hedge fund activity in other stocks similar to Lamb Weston Holdings, Inc. (NYSE:LW). These stocks are Tableau Software Inc (NYSE:DATA), PTC Inc (NASDAQ:PTC), EXACT Sciences Corporation (NASDAQ:EXAS), and EnCana Corporation (NYSE:ECA). All of these stocks’ market caps are similar to LW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DATA | 44 | 2281877 | 8 |
| PTC | 25 | 1387214 | -6 |
| EXAS | 33 | 814522 | 3 |
| ECA | 44 | 1002031 | 4 |
| Average | 36.5 | 1371411 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.5 hedge funds with bullish positions and the average amount invested in these stocks was $1371 million. That figure was $1255 million in LW’s case. Tableau Software Inc (NYSE:DATA) is the most popular stock in this table. On the other hand PTC Inc (NASDAQ:PTC) is the least popular one with only 25 bullish hedge fund positions. Lamb Weston Holdings, Inc. (NYSE:LW) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately LW wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on LW were disappointed as the stock returned -19.6% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
