In this article you are going to find out whether hedge funds think Laureate Education, Inc. (NASDAQ:LAUR) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Laureate Education, Inc. (NASDAQ:LAUR) a buy, sell, or hold? Hedge funds are getting less optimistic. The number of bullish hedge fund positions were cut by 9 in recent months. Our calculations also showed that LAUR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). LAUR was in 25 hedge funds’ portfolios at the end of March. There were 34 hedge funds in our database with LAUR holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are numerous indicators stock traders employ to size up their stock investments. Two of the best indicators are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outpace the broader indices by a superb amount (see the details here).
Jeffrey Tannenbaum of Fir Tree
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the new hedge fund action surrounding Laureate Education, Inc. (NASDAQ:LAUR).
Hedge fund activity in Laureate Education, Inc. (NASDAQ:LAUR)
At Q1’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -26% from the previous quarter. By comparison, 21 hedge funds held shares or bullish call options in LAUR 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.
When looking at the institutional investors followed by Insider Monkey, Park West Asset Management, managed by Peter S. Park, holds the biggest position in Laureate Education, Inc. (NASDAQ:LAUR). Park West Asset Management has a $54.5 million position in the stock, comprising 3.7% of its 13F portfolio. Sitting at the No. 2 spot is Maple Rock Capital, managed by Len Kipp and Xavier Majic, which holds a $29.8 million position; 7.7% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions encompass Jeffrey Tannenbaum’s Fir Tree, Jared Nussbaum’s Nut Tree Capital and Anand Parekh’s Alyeska Investment Group. In terms of the portfolio weights assigned to each position Nut Tree Capital allocated the biggest weight to Laureate Education, Inc. (NASDAQ:LAUR), around 7.99% of its 13F portfolio. Maple Rock Capital is also relatively very bullish on the stock, setting aside 7.65 percent of its 13F equity portfolio to LAUR.
Since Laureate Education, Inc. (NASDAQ:LAUR) has experienced falling interest from hedge fund managers, it’s easy to see that there exists a select few hedgies that slashed their entire stakes by the end of the first quarter. Interestingly, Robert Joseph Caruso’s Select Equity Group dumped the largest stake of the “upper crust” of funds followed by Insider Monkey, valued at about $26.8 million in stock, and Angela Aldrich’s Bayberry Capital Partners was right behind this move, as the fund dropped about $13.4 million worth. These moves are interesting, as total hedge fund interest dropped by 9 funds by the end of the first quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Laureate Education, Inc. (NASDAQ:LAUR). These stocks are Macquarie Infrastructure Corporation (NYSE:MIC), LivaNova PLC (NASDAQ:LIVN), GATX Corporation (NYSE:GATX), and Franklin Electric Co., Inc. (NASDAQ:FELE). This group of stocks’ market caps are closest to LAUR’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MIC,30,251515,-4 LIVN,24,235932,2 GATX,13,169186,-8 FELE,16,174928,2 Average,20.75,207890,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $208 million. That figure was $198 million in LAUR’s case. Macquarie Infrastructure Corporation (NYSE:MIC) is the most popular stock in this table. On the other hand GATX Corporation (NYSE:GATX) is the least popular one with only 13 bullish hedge fund positions. Laureate Education, Inc. (NASDAQ:LAUR) 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. 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 13.9% in 2020 through June 10th but beat the market by 14.2 percentage points. Unfortunately LAUR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on LAUR were disappointed as the stock returned 6.8% during the same time period and underperformed the market. If you are interested in investing 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 already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.