The last 13F reporting period has passed and Insider Monkey has gone through 821 13F filings that well-known hedge funds and value investors are required to file by the SEC. The 13F filings show fund and investor portfolio positions as of March 31, a week after the market bottomed. Now we are almost done with the second quarter. Investors have decided to bet on economic recovery and a rebound in stock markets. The S&P 500 index returned nearly 20% this quarter. In this article, you’ll find out if hedge funds thought of Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA) was a good investment heading into the second quarter and how the stock traded against top hedge fund picks.
Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA) investors should be aware of the increased support from the world’s most elite fund managers in recent times. Our calculations have also shown that LOMA is not one of the 30 most popular stocks among hedge funds (click for Q1 rankings and watch the video for a quick overview of the top 5 stocks).
Video: Watch our video on the 5 most popular hedge fund stocks.
So why do we pay attention to hedge fund sentiment before making investment decisions? Our research showed that hedge fund small-cap stock selection managed to beat the market by double digits every year between 1999 and 2016, but the margin of outperformance has shrunk in recent years. Nevertheless, we were still able to identify in advance a select group of hedge funds that have outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see details here). We were also able to identify in advance a select group of hedge funds that underperformed the market by 10 percentage points per year between 2006 and 2017. Interestingly, the underperformance margin for these stocks has increased in recent years. Investors who are long in the market and short in these stocks would have returned more than 27% per year between 2015 and 2017. We have been following and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you are not comfortable shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
James Dondero Highland Capital Management
James Dondero of Highland Capital Management
At Insider Monkey, we scour multiple sources to discover the next big investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to provide high returns with one trade per week, so we check his most compelling idea. A second trader claims to make lucrative profits using a “weekend trading strategy”, so we’re looking at strategy choices. We read letters from hedge fund investors and listen to stock presentations at hedge fund conferences. We recently recommended several actions inspired in part by legends Letter to Investors from Bill Miller. Our best call in 2020 was to short the market when the S&P 500 was trading at 3150 in February after realizing the significance of the coronavirus pandemic before most investors. With that in mind, let’s take a look at the new hedge fund stock encompassing Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA).
What have hedge funds done with Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE: LOMA)?
Heading into the second quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey were long in this security, a change of 71% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in LOMA a year ago. With hedge fund positions undergoing their usual ebb and flow, there are a few notable hedge fund managers who were significantly increasing their holdings (or had already accumulated significant positions).
More precisely, Redwood Capital Management was the largest shareholder of Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE: LOMA), with a stake worth $16.5 million at the end of September. Trailing Redwood Capital Management was International Value Advisers, which raised a stake valued at $9.7 million. Marathon Asset Management, Oaktree Capital Management and Highland Capital Management were also very fond of the stock, becoming one of the company’s largest hedge fund holders. In terms of portfolio weights assigned to each position, Redwood Capital Management assigned the largest weighting to Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE: LOMA), approximately 3.01% of its 13F portfolio. International securities advisors is also relatively very bullish on the stock, distributing 0.61% of its portfolio of 13F shares to LOMA.
Consequently, key fund managers jumped headfirst into Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE: LOMA). Marshall Wace LLP, led by Paul Marshall and Ian Wace, was the largest position in Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE: LOMA). Marshall Wace LLP had invested $0.3 million in the company at the end of the quarter. by Ken Griffin Citadel Investment Group also initiated a $0.1 million position during the quarter. Other funds with new positions in the stock are Israel Englander’s Millennium Management, Greg Eisner’s Engineers Gate Manager and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s look at hedge fund activity in other stocks – not necessarily in the same industry as Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE: LOMA) but of similar value. We’ll take a look at PBF Logistics LP (NYSE:PBFX), Geopark Ltd (NYSE:GPRK), ProSight Global, Inc. (NYSE:ADVANTAGES) and TPG RE Finance Trust, Inc. (NYSE:TRTX). All market capitalizations of these shares correspond to the market capitalization of LOMA.
[table] Ticker, Number of HF with positions, Total value of HF positions (x1000), HF position change PBFX,3,870,0 GPRK,13,49368,2 PROS,4,3547,0 TRTX,17,29436,2 Average,9.25 ,20805.1 [/table]
As you can see, these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. This figure was $31 million in the case of LOMA. TPG RE Finance Trust, Inc. (NYSE:TRTX) is the most popular action in this table. On the other hand, PBF Logistics LP (NYSE:PBFX) is the least popular with only 3 bullish hedge fund positions. Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE: LOMA) is not the most popular stock in this group, but hedge fund interest is still above average. This is a mildly positive signal, but we prefer to spend our time looking for stocks on which hedge funds are piling up. Our calculations showed that Top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30, but beat the market by 15.5 percentage points. Unfortunately, LOMA was not as popular as these 10 stocks and hedge funds betting on LOMA were disappointed as the stock returned 20% over the same period and underperformed the market. If you want to invest in large cap stocks with huge upside potential, you should check out the Top 10 most popular stocks among hedge funds, as many of these stocks have already outperformed the market so far this year.
Resource KT
