As we already know from media reports and hedge fund investor letters, many hedge funds lost money in fourth quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with technology among them. Nevertheless, most investors decided to stick to their bullish theses and recouped their losses by the end of the first quarter. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Fox Corporation (NASDAQ:FOXA).
Fox Corporation (NASDAQ:FOXA) has seen an increase in activity from the world's largest hedge funds of late. Our calculations also showed that FOXA ranked 30th among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's take a gander at the key hedge fund action encompassing Fox Corporation (NASDAQ:FOXA).
Hedge fund activity in Fox Corporation (NASDAQ:FOXA)
At Q1's end, a total of 71 of the hedge funds tracked by Insider Monkey were long this stock, a change of 1% from the previous quarter. By comparison, 50 hedge funds held shares or bullish call options in FOXA a year ago. So, let's review 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, Baupost Group, managed by Seth Klarman, holds the number one position in Fox Corporation (NASDAQ:FOXA). Baupost Group has a $1.003 billion position in the stock, comprising 8.4% of its 13F portfolio. Coming in second is John Armitage of Egerton Capital Limited, with a $508.8 million position; 3.6% of its 13F portfolio is allocated to the company. Some other peers that hold long positions include Third Point, Carl Tiedemann and Michael Tiedemann's TIG Advisors and Senator Investment Group.
As industrywide interest jumped, key hedge funds were leading the bulls' herd. Baupost Group assembled the most valuable position in Fox Corporation (NASDAQ:FOXA). Baupost Group had $1.003 billion invested in the company at the end of the quarter. Egerton Capital Limited also initiated a $508.8 million position during the quarter. The following funds were also among the new FOXA investors: Dan Loeb's Third Point, Doug Silverman and Alexander Klabin's Senator Investment Group, and Kenneth Mario Garschina's Mason Capital Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Fox Corporation (NASDAQ:FOXA) but similarly valued. We will take a look at Fox Corporation (NASDAQ:FOX), Eversource Energy (NYSE:ES), SBA Communications Corporation (NASDAQ:SBAC), and McKesson Corporation (NYSE:MCK). This group of stocks' market values resemble FOXA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FOX,40,1343889,-4 ES,16,403030,-4 SBAC,29,1658761,-3 MCK,32,1989051,-12 Average,29.25,1348683,-5.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.25 hedge funds with bullish positions and the average amount invested in these stocks was $1349 million. That figure was $4255 million in FOXA's case. Fox Corporation (NASDAQ:FOX) is the most popular stock in this table. On the other hand Eversource Energy (NYSE:ES) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Fox Corporation (NASDAQ:FOXA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately FOXA wasn't nearly as popular as these 20 stocks and hedge funds that were betting on FOXA were disappointed as the stock returned -3.5% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.