How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Liberty Latin America Ltd. (NASDAQ:LILAK).
Is Liberty Latin America Ltd. (NASDAQ:LILAK) a buy, sell, or hold? The smart money was in a bullish mood. The number of long hedge fund positions went up by 1 in recent months. Liberty Latin America Ltd. (NASDAQ:LILAK) was in 28 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 62. Our calculations also showed that LILAK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 27 hedge funds in our database with LILAK positions at the end of the second quarter.
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 we’re going to take a look at the latest hedge fund action encompassing Liberty Latin America Ltd. (NASDAQ:LILAK).
Donald Sussman of Paloma Partners
Do Hedge Funds Think LILAK Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards LILAK over the last 25 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ashe Capital, managed by William Crowley, William Harker, and Stephen Blass, holds the biggest position in Liberty Latin America Ltd. (NASDAQ:LILAK). Ashe Capital has a $162.6 million position in the stock, comprising 9.8% of its 13F portfolio. The second most bullish fund manager is Two Creeks Capital Management, led by Ryan Pedlow, holding a $80.9 million position; the fund has 4.3% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism comprise Debra Fine’s Fine Capital Partners, Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors and Wallace Weitz’s Wallace R. Weitz & Co.. In terms of the portfolio weights assigned to each position Ashe Capital allocated the biggest weight to Liberty Latin America Ltd. (NASDAQ:LILAK), around 9.78% of its 13F portfolio. Quaker Capital Investments is also relatively very bullish on the stock, dishing out 8.37 percent of its 13F equity portfolio to LILAK.
As one would reasonably expect, key money managers were breaking ground themselves. ExodusPoint Capital, managed by Michael Gelband, initiated the most outsized position in Liberty Latin America Ltd. (NASDAQ:LILAK). ExodusPoint Capital had $0.7 million invested in the company at the end of the quarter. Karim Abbadi and Edward McBride’s Centiva Capital also made a $0.2 million investment in the stock during the quarter. The other funds with brand new LILAK positions are Greg Eisner’s Engineers Gate Manager and Donald Sussman’s Paloma Partners.
Let’s check out hedge fund activity in other stocks similar to Liberty Latin America Ltd. (NASDAQ:LILAK). We will take a look at Chindata Group Holdings Limited (NASDAQ:CD), AdaptHealth Corp. (NASDAQ:AHCO), Liberty Latin America Ltd. (NASDAQ:LILA), SPX FLOW, Inc. (NYSE:FLOW), California Water Service Group (NYSE:CWT), Texas Capital Bancshares Inc (NASDAQ:TCBI), and Intra-Cellular Therapies Inc (NASDAQ:ITCI). This group of stocks’ market caps match LILAK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CD | 13 | 126458 | 3 |
| AHCO | 21 | 471946 | 1 |
| LILA | 14 | 130595 | -2 |
| FLOW | 27 | 335783 | 13 |
| CWT | 11 | 133507 | 2 |
| TCBI | 32 | 283595 | 5 |
| ITCI | 20 | 312334 | -3 |
| Average | 19.7 | 256317 | 2.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.7 hedge funds with bullish positions and the average amount invested in these stocks was $256 million. That figure was $522 million in LILAK’s case. Texas Capital Bancshares Inc (NASDAQ:TCBI) is the most popular stock in this table. On the other hand California Water Service Group (NYSE:CWT) is the least popular one with only 11 bullish hedge fund positions. Liberty Latin America Ltd. (NASDAQ:LILAK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LILAK is 60. 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 positive signal but 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately LILAK wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LILAK were disappointed as the stock returned -14.9% since the end of September (through 12/9) 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 many of these stocks already outperformed the market since 2019.
Follow Liberty Global Ltd.
Follow Liberty Global Ltd.
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Disclosure: None. This article was originally published at Insider Monkey.
