Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Louisiana-Pacific Corporation (NYSE:LPX) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is Louisiana-Pacific Corporation (NYSE:LPX) a worthy investment now? Money managers were getting less bullish. The number of bullish hedge fund bets were trimmed by 3 recently. Louisiana-Pacific Corporation (NYSE:LPX) was in 36 hedge funds’ portfolios at the end of September. The all time high for this statistic is 41. Our calculations also showed that LPX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Kerr Neilson of Platinum Asset Management
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 let’s take a peek at the latest hedge fund action regarding Louisiana-Pacific Corporation (NYSE:LPX).
Do Hedge Funds Think LPX Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. By comparison, 40 hedge funds held shares or bullish call options in LPX a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Platinum Asset Management, managed by Kerr Neilson, holds the largest position in Louisiana-Pacific Corporation (NYSE:LPX). Platinum Asset Management has a $83.4 million position in the stock, comprising 2.3% of its 13F portfolio. The second largest stake is held by Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $80.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that are bullish consist of Alexander Mitchell’s Scopus Asset Management, Robert Bishop’s Impala Asset Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Appian Way Asset Management allocated the biggest weight to Louisiana-Pacific Corporation (NYSE:LPX), around 7.05% of its 13F portfolio. Sandbar Asset Management is also relatively very bullish on the stock, designating 4.94 percent of its 13F equity portfolio to LPX.
Seeing as Louisiana-Pacific Corporation (NYSE:LPX) has faced declining sentiment from hedge fund managers, we can see that there were a few hedgies that elected to cut their entire stakes last quarter. At the top of the heap, Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors dumped the biggest position of the 750 funds tracked by Insider Monkey, valued at an estimated $13.5 million in call options. Michael Gelband’s fund, ExodusPoint Capital, also cut its call options, about $8.1 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 3 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Louisiana-Pacific Corporation (NYSE:LPX). We will take a look at ZIM Integrated Shipping Services Ltd. (NYSE:ZIM), Duck Creek Technologies, Inc. (NASDAQ:DCT), eXp World Holdings, Inc. (NASDAQ:EXPI), WESCO International, Inc. (NYSE:WCC), Everbridge, Inc. (NASDAQ:EVBG), Integra Lifesciences Holdings Corp (NASDAQ:IART), and Halozyme Therapeutics, Inc. (NASDAQ:HALO). This group of stocks’ market values match LPX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ZIM | 22 | 552565 | -3 |
| DCT | 17 | 234874 | -1 |
| EXPI | 22 | 107817 | 4 |
| WCC | 27 | 1174272 | 4 |
| EVBG | 23 | 1307891 | -3 |
| IART | 17 | 82913 | -2 |
| HALO | 23 | 179614 | 3 |
| Average | 21.6 | 519992 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $520 million. That figure was $671 million in LPX’s case. WESCO International, Inc. (NYSE:WCC) is the most popular stock in this table. On the other hand Duck Creek Technologies, Inc. (NASDAQ:DCT) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Louisiana-Pacific Corporation (NYSE:LPX) is more popular among hedge funds. Our overall hedge fund sentiment score for LPX is 78.3. 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 and managed to beat the market by another 3.6 percentage points. Hedge funds were also right about betting on LPX as the stock returned 8.6% since the end of September (through 1/31) 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.
Follow Louisiana-Pacific Corp (NYSE:LPX)
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Disclosure: None. This article was originally published at Insider Monkey.
