We recently compiled a list of the 12 Best New Stocks to Buy According to Hedge Funds.In this article, we are going to take a look at where Lineage, Inc. (NASDAQ:LINE) stands against the other new stocks.
US public markets continue to brace themselves for a 2025 resurgence, which should be led by interest rate cuts, pent-up investor demand, and a growing backlog of IPO expectations. As per PwC, there are over 700 unicorns in the private market as a result of the subdued IPO activity over the previous 3 years.
Many IPO candidates, which also include some unicorns, have utilized this time to improve and strengthen their finances and transition to sustainable growth models. Apart from this, pressure continues to mount on private equity fund managers to return capital after an elongated exit dry spell, reported PwC.
As per PwC, the traditional IPO market saw its gradual comeback in 2024, with proceeds garnered ~50% higher than in 2023 and ~4x the amount raised in 2022. The IPO activity was broad-based, with strong participation from sectors such as technology, life sciences, consumer markets, and financial services. Stock prices of this year’s traditional IPOs appreciated ~29%, surpassing the S&P 500 index’s return of ~27% on a YTD basis (ended 26th December 2024). This highlights the strength, investor interest, and traction in new offerings.
PwC went on to add that IPO activity saw a strong increase in 2024, with 61 traditional IPOs garnering more than $26.4 billion YTD, which was in line with the combined total number of IPOs in 2022 and 2023, which witnessed 28 and 35 IPOs, respectively. Despite this improvement, IPO activity remained short of early anticipations and historical levels of activity. This is because several IPO candidates decided to stay on the sidelines as they waited for a clearer economic picture after the U.S. presidential elections.
The continued rate cuts and a stable policy environment should boost investor confidence, which can help create more favorable market conditions. PwC gave a 60% probability of a “soft landing” scenario and a 20% probability of an optimistic “no landing.” Notably, both of these scenarios offer a supportive environment for IPOs.
As per Lynn Martin, president of the NYSE, 2025 year will be an active one for the IPOs. Also, Reuters highlighted that reduced interest rates and inflation slowdown should act as catalysts for new listings. Furthermore, the expected easing of regulations under the new Administration paints a positive picture of the deal activity in capital markets. Bloomberg reported that, as per Goldman Sachs, the number of IPOs in the tech sector is expected to more than double next year.
Our Methodology
To list the 12 Best New Stocks to Buy According to Hedge Funds, we used a screener to shortlist the companies that went public in the past 2 years. Next, we narrowed the list to the ones having high hedge fund positioning. Finally, the stocks were ranked in ascending order of their hedge fund sentiment, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A fleet of rented trucks parked alongside a warehouse, emphasizing the company’s logistics services.
Number of Hedge Fund Holders: 35
Lineage, Inc. (NASDAQ:LINE) is a global leader in temperature-controlled logistics, specializing in the storage and transportation of perishable goods. It began trading on 25th July 2024.
Lineage, Inc. (NASDAQ:LINE)’s growth is expected to be aided by significant investment in technology and automation. The technological advancements should drive substantial operational efficiencies and margin improvements. These improvements should stem from cost-saving measures in labor and power consumption and enhanced data analytics capabilities that optimize warehouse operations. Lineage, Inc. (NASDAQ:LINE)’s focus on automation and data-driven decision-making places it well to address industry challenges like labor shortages and energy costs.
Lineage, Inc. (NASDAQ:LINE)’s proprietary warehouse management system, LinOS, and customer-facing platform, Lineage Link, should enhance operational efficiency and improve customer experience. Technological advancements can also lead to higher warehouse utilization rates.
As Lineage, Inc. (NASDAQ:LINE) focuses on refining and expanding its technological capabilities, it can offer more value-added services to its customers, potentially increasing revenue per cubic foot of storage space. Also, the company’s data analytics capabilities can offer valuable insights to its customers, supporting them in optimizing supply chains and inventory management. This can further strengthen customer relationships and create additional revenue streams via consulting or data services.
Overall LINE ranks 8th on our list of the best new stocks to buy according to hedge funds. While we acknowledge the potential of LINE as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than LINE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
