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With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was Clear Channel Outdoor Holdings, Inc. (NYSE:CCO).
Is CCO stock a buy? Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) shareholders have witnessed an increase in hedge fund interest recently. Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) was in 31 hedge funds' portfolios at the end of December. The all time high for this statistic is 44. There were 30 hedge funds in our database with CCO holdings at the end of September. Our calculations also showed that CCO isn't among the 30 most popular stocks among hedge funds (click for Q4 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 124 percentage points since March 2017 (see the details here).
David E. Shaw of D.E. Shaw
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. With all of this in mind let's take a look at the recent hedge fund action surrounding Clear Channel Outdoor Holdings, Inc. (NYSE:CCO).
Do Hedge Funds Think CCO Is A Good Stock To Buy Now?
At the end of December, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CCO over the last 22 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Mason Capital Management was the largest shareholder of Clear Channel Outdoor Holdings, Inc. (NYSE:CCO), with a stake worth $48.9 million reported as of the end of December. Trailing Mason Capital Management was D E Shaw, which amassed a stake valued at $29 million. Brigade Capital, Contrarian Capital, and Halcyon Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Mason Capital Management allocated the biggest weight to Clear Channel Outdoor Holdings, Inc. (NYSE:CCO), around 3.99% of its 13F portfolio. Contrarian Capital is also relatively very bullish on the stock, dishing out 2.6 percent of its 13F equity portfolio to CCO.
As aggregate interest increased, key hedge funds have been driving this bullishness. BeaconLight Capital, managed by Ed Bosek, initiated the most valuable position in Clear Channel Outdoor Holdings, Inc. (NYSE:CCO). BeaconLight Capital had $1.2 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $0.8 million position during the quarter. The following funds were also among the new CCO investors: Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital), and Peter Algert's Algert Global.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) but similarly valued. These stocks are CIRCOR International, Inc. (NYSE:CIR), Maverix Metals Inc. (NYSE:MMX), Hibbett Sports, Inc. (NASDAQ:HIBB), Magic Software Enterprises Ltd. (NASDAQ:MGIC), Sportsman's Warehouse Holdings Inc (NASDAQ:SPWH), Energy Recovery, Inc. (NASDAQ:ERII), and Blucora Inc (NASDAQ:BCOR). This group of stocks' market valuations resemble CCO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CIR,10,139125,1 MMX,9,41947,1 HIBB,20,150110,-1 MGIC,5,11835,1 SPWH,25,174861,-1 ERII,11,94250,0 BCOR,16,119588,-2 Average,13.7,104531,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.7 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $178 million in CCO's case. Sportsman's Warehouse Holdings Inc (NASDAQ:SPWH) is the most popular stock in this table. On the other hand Magic Software Enterprises Ltd. (NASDAQ:MGIC) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) is more popular among hedge funds. Our overall hedge fund sentiment score for CCO is 77.1. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 12.2% in 2021 through April 12th but still managed to beat the market by 1.5 percentage points. Hedge funds were also right about betting on CCO as the stock returned 22.4% since the end of December (through 4/12) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.