Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients' money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Hedge fund interest in Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare CCO to other stocks including QTS Realty Trust Inc (NYSE:QTS), Enerplus Corp (NYSE:ERF), and Fabrinet (NYSE:FN) to get a better sense of its popularity.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a look at the latest hedge fund action regarding Clear Channel Outdoor Holdings, Inc. (NYSE:CCO).
How have hedgies been trading Clear Channel Outdoor Holdings, Inc. (NYSE:CCO)?
At the end of the fourth quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 12 hedge funds with a bullish position in CCO a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) was held by Angelo Gordon & Co, which reported holding $19.3 million worth of stock at the end of September. It was followed by Abrams Capital Management with a $17.4 million position. Other investors bullish on the company included GAMCO Investors, Canyon Capital Advisors, and Renaissance Technologies.
Due to the fact that Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) has faced bearish sentiment from the aggregate hedge fund industry, it's safe to say that there exists a select few hedgies who were dropping their positions entirely heading into Q3. At the top of the heap, Jamie Zimmerman's Litespeed Management cut the biggest position of the 700 funds followed by Insider Monkey, valued at close to $0.6 million in stock. Carl Tiedemann and Michael Tiedemann's fund, TIG Advisors, also dumped its stock, about $0.5 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to Clear Channel Outdoor Holdings, Inc. (NYSE:CCO). We will take a look at QTS Realty Trust Inc (NYSE:QTS), Enerplus Corp (NYSE:ERF), Fabrinet (NYSE:FN), and Granite Construction Incorporated (NYSE:GVA). This group of stocks' market values are closest to CCO's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QTS,16,316250,-3 ERF,18,142066,1 FN,18,127429,3 GVA,11,94135,-5 Average,15.75,169970,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $170 million. That figure was $71 million in CCO's case. Enerplus Corp (NYSE:ERF) is the most popular stock in this table. On the other hand Granite Construction Incorporated (NYSE:GVA) is the least popular one with only 11 bullish hedge fund positions. Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) is not the least popular stock in this group but hedge fund interest is still below average. 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately CCO wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); CCO investors were disappointed as the stock returned -1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 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.