Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
LKQ Corporation (NASDAQ:LKQ) investors should pay attention to an increase in hedge fund interest of late. LKQ was in 35 hedge funds’ portfolios at the end of September. There were 28 hedge funds in our database with LKQ holdings at the end of the previous quarter. At the end of this article we will also compare LKQ to other stocks including Western Gas Equity Partners LP (NYSE:WGP), Ball Corporation (NYSE:BLL), and Markwest Energy Partners LP (NYSE:MWE) to get a better sense of its popularity.
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Keeping this in mind, let’s take a peek at the fresh action regarding LKQ Corporation (NASDAQ:LKQ).
How have hedgies been trading LKQ Corporation (NASDAQ:LKQ)?
At Q3’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the previous quarter. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Pennant Capital Management, managed by Alan Fournier, holds the most valuable position in LKQ Corporation (NASDAQ:LKQ). Pennant Capital Management has a $133.4 million position in the stock, comprising 2.8% of its 13F portfolio. Coming in second is David Goel and Paul Ferri of Matrix Capital Management, with a $115.1 million position; the fund has 5.3% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions contain Jonathan Auerbach’s Hound Partners, Charles Akre’s Akre Capital Management and Michael R. Weisberg’s Crestwood Capital Management.
With a general bullishness amongst the heavyweights, some big names have jumped into LKQ Corporation (NASDAQ:LKQ) headfirst. Pennant Capital Management, managed by Alan Fournier, initiated the most outsized position in LKQ Corporation (NASDAQ:LKQ). Pennant Capital Management had $133.4 million invested in the company at the end of the quarter. Jim Simons’ Renaissance Technologies also made a $6 million investment in the stock during the quarter. The other funds with brand new LKQ positions are Neil Chriss’s Hutchin Hill Capital, Matthew Tewksbury’s Stevens Capital Management, and George Hall’s Clinton Group.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as LKQ Corporation (NASDAQ:LKQ) but similarly valued. We will take a look at Western Gas Equity Partners LP (NYSE:WGP), Ball Corporation (NYSE:BLL), Markwest Energy Partners LP (NYSE:MWE), and Quintiles Transnational Holdings Inc (NYSE:Q). This group of stocks’ market values match LKQ’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WGP | 9 | 45522 | 1 |
| BLL | 38 | 1216368 | 9 |
| MWE | 17 | 412658 | 4 |
| Q | 34 | 466908 | 5 |
As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $535 million. That figure was $695 million in LKQ’s case. Ball Corporation (NYSE:BLL) is the most popular stock in this table. On the other hand Western Gas Equity Partners LP (NYSE:WGP) is the least popular one with only 9 bullish hedge fund positions. LKQ Corporation (NASDAQ:LKQ) 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. In this regard BLL might be a better candidate to consider a long position.
