Do Hedge Funds Love Luminar Technologies, Inc. (LAZR)?

·6 min read

At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not Luminar Technologies, Inc. (NASDAQ:LAZR) makes for a good investment right now.

Is Luminar Technologies, Inc. (NASDAQ:LAZR) the right investment to pursue these days? The best stock pickers were taking an optimistic view. The number of long hedge fund bets increased by 9 lately. Luminar Technologies, Inc. (NASDAQ:LAZR) was in 21 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 25. Our calculations also showed that LAZR isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 12 hedge funds in our database with LAZR positions at the end of the first quarter.

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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

COATUE MANAGEMENT
COATUE MANAGEMENT

Philippe Laffont of Coatue Management

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. Now we're going to take a peek at the recent hedge fund action regarding Luminar Technologies, Inc. (NASDAQ:LAZR).

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

At second quarter's end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 75% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in LAZR a year ago. With hedgies' capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Is LAZR A Good Stock To Buy?
Is LAZR A Good Stock To Buy?

The largest stake in Luminar Technologies, Inc. (NASDAQ:LAZR) was held by Moore Global Investments, which reported holding $87.1 million worth of stock at the end of June. It was followed by Coatue Management with a $34.9 million position. Other investors bullish on the company included Citadel Investment Group, Chescapmanager LLC, and Antara Capital. In terms of the portfolio weights assigned to each position Chescapmanager LLC allocated the biggest weight to Luminar Technologies, Inc. (NASDAQ:LAZR), around 2.02% of its 13F portfolio. Element Capital Management is also relatively very bullish on the stock, dishing out 1.85 percent of its 13F equity portfolio to LAZR.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Moore Global Investments, managed by Louis Bacon, assembled the most valuable position in Luminar Technologies, Inc. (NASDAQ:LAZR). Moore Global Investments had $87.1 million invested in the company at the end of the quarter. Himanshu Gulati's Antara Capital also initiated a $13.7 million position during the quarter. The other funds with brand new LAZR positions are Jeffrey Talpins's Element Capital Management, Ken Griffin's Citadel Investment Group, and Matthew L Pinz's Pinz Capital.

Let's now take a look at hedge fund activity in other stocks similar to Luminar Technologies, Inc. (NASDAQ:LAZR). We will take a look at Voya Financial Inc (NYSE:VOYA), Cimarex Energy Co (NYSE:XEC), Credit Acceptance Corp. (NASDAQ:CACC), Scientific Games Corp (NASDAQ:SGMS), Apartment Income REIT Corp. (NYSE:AIRC), RenaissanceRe Holdings Ltd. (NYSE:RNR), and Olin Corporation (NYSE:OLN). This group of stocks' market caps match LAZR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VOYA,44,983651,2 XEC,36,1134161,-3 CACC,20,574521,-3 SGMS,24,1451681,1 AIRC,14,479817,0 RNR,31,446197,1 OLN,37,1325786,3 Average,29.4,913688,0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.4 hedge funds with bullish positions and the average amount invested in these stocks was $914 million. That figure was $193 million in LAZR's case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table. On the other hand Apartment Income REIT Corp. (NYSE:AIRC) is the least popular one with only 14 bullish hedge fund positions. Luminar Technologies, Inc. (NASDAQ:LAZR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LAZR is 46.9. 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% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately LAZR wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); LAZR investors were disappointed as the stock returned -28.5% since the end of June (through 10/22) 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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