Where Do Hedge Funds Stand On LifeMD, Inc. (LFMD)?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards LifeMD, Inc. (NASDAQ:LFMD) to find out whether there were any major changes in hedge funds’ views.

LifeMD, Inc. (NASDAQ:LFMD) was in 6 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 2. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. LFMD investors should be aware of an increase in hedge fund sentiment recently. There were 2 hedge funds in our database with LFMD holdings at the end of December. Our calculations also showed that LFMD isn’t among the 30 most popular stocks among hedge funds (click for Q1 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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Israel Englander of Millennium Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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 we’re going to take a glance at the recent hedge fund action regarding LifeMD, Inc. (NASDAQ:LFMD).

Do Hedge Funds Think LFMD Is A Good Stock To Buy Now?

At first quarter’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 200% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in LFMD a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Israel Englander’s Millennium Management has the most valuable position in LifeMD, Inc. (NASDAQ:LFMD), worth close to $11.8 million, accounting for less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Ken Griffin of Citadel Investment Group, with a $3.6 million call position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers with similar optimism include Travis Cocke’s Voss Capital, Ken Griffin’s Citadel Investment Group and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors. In terms of the portfolio weights assigned to each position Voss Capital allocated the biggest weight to LifeMD, Inc. (NASDAQ:LFMD), around 0.79% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to LFMD.

Now, specific money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, established the most valuable position in LifeMD, Inc. (NASDAQ:LFMD). Millennium Management had $11.8 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $3.6 million investment in the stock during the quarter. The following funds were also among the new LFMD investors: Travis Cocke’s Voss Capital, Ken Griffin’s Citadel Investment Group, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as LifeMD, Inc. (NASDAQ:LFMD) but similarly valued. These stocks are Cue Biopharma, Inc. (NASDAQ:CUE), Quotient Limited (NASDAQ:QTNT), BlueLinx Holdings Inc. (NYSE:BXC), Source Capital, Inc. (NYSE:SOR), Oil States International, Inc. (NYSE:OIS), SciPlay Corporation (NASDAQ:SCPL), and Future FinTech Group Inc. (NASDAQ:FTFT). All of these stocks’ market caps match LFMD’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $16 million in LFMD’s case. SciPlay Corporation (NASDAQ:SCPL) is the most popular stock in this table. On the other hand Source Capital, Inc. (NYSE:SOR) is the least popular one with only 2 bullish hedge fund positions. LifeMD, Inc. (NASDAQ:LFMD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LFMD is 48.5. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately LFMD wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); LFMD investors were disappointed as the stock returned -20% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.