Hedge Funds Are Warming Up To Liberty Broadband Corp (LBRDA)

·6 min read

In this article we will take a look at whether hedge funds think Liberty Broadband Corp (NASDAQ:LBRDA) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Liberty Broadband Corp (NASDAQ:LBRDA) was in 28 hedge funds' portfolios at the end of June. The all time high for this statistic is 29. LBRDA has seen an increase in hedge fund interest recently. There were 23 hedge funds in our database with LBRDA positions at the end of the first quarter. Our calculations also showed that LBRDA isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Boykin Curry EAGLE CAPITAL MANAGEMENT
Boykin Curry EAGLE CAPITAL MANAGEMENT

Boykin Curry of Eagle Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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. With all of this in mind we're going to analyze the recent hedge fund action surrounding Liberty Broadband Corp (NASDAQ:LBRDA).

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

Heading into the third quarter of 2021, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in LBRDA a year ago. With the smart money's capital changing hands, there exists a few notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Is LBRDA A Good Stock To Buy?
Is LBRDA A Good Stock To Buy?

According to Insider Monkey's hedge fund database, FPR Partners, managed by Bob Peck and Andy Raab, holds the number one position in Liberty Broadband Corp (NASDAQ:LBRDA). FPR Partners has a $214.5 million position in the stock, comprising 5.5% of its 13F portfolio. The second most bullish fund manager is William Crowley, William Harker, and Stephen Blass of Ashe Capital, with a $164.9 million position; the fund has 10.2% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish include Boykin Curry's Eagle Capital Management, D. E. Shaw's D E Shaw and Michael Doheny's Freshford Capital Management. In terms of the portfolio weights assigned to each position Freshford Capital Management allocated the biggest weight to Liberty Broadband Corp (NASDAQ:LBRDA), around 11.44% of its 13F portfolio. Ashe Capital is also relatively very bullish on the stock, dishing out 10.17 percent of its 13F equity portfolio to LBRDA.

As one would reasonably expect, some big names were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most valuable position in Liberty Broadband Corp (NASDAQ:LBRDA). Arrowstreet Capital had $3 million invested in the company at the end of the quarter. Brett Huckelbridge's Steel Canyon Capital also initiated a $1.7 million position during the quarter. The following funds were also among the new LBRDA investors: Ray Dalio's Bridgewater Associates, Ken Griffin's Citadel Investment Group, and Dmitry Balyasny's Balyasny Asset Management.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Liberty Broadband Corp (NASDAQ:LBRDA) but similarly valued. We will take a look at BeiGene, Ltd. (NASDAQ:BGNE), Skyworks Solutions Inc (NASDAQ:SWKS), Li Auto Inc. (NASDAQ:LI), Chunghwa Telecom Co., Ltd (NYSE:CHT), Southwest Airlines Co. (NYSE:LUV), Carnival Corporation (NYSE:CCL), and Waste Connections, Inc. (NYSE:WCN). This group of stocks' market valuations match LBRDA's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BGNE,21,6192135,2 SWKS,37,924180,4 LI,20,457452,2 CHT,7,164618,4 LUV,49,926293,-3 CCL,31,456173,-13 WCN,32,763813,1 Average,28.1,1412095,-0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.1 hedge funds with bullish positions and the average amount invested in these stocks was $1412 million. That figure was $905 million in LBRDA's case. Southwest Airlines Co. (NYSE:LUV) is the most popular stock in this table. On the other hand Chunghwa Telecom Co., Ltd (NYSE:CHT) is the least popular one with only 7 bullish hedge fund positions. Liberty Broadband Corp (NASDAQ:LBRDA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LBRDA is 64. 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 24.9% in 2021 through October 15th and surpassed the market again by 4.5 percentage points. Unfortunately LBRDA wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); LBRDA investors were disappointed as the stock returned -1.8% since the end of June (through 10/15) 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.

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