Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before the Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first half of 2019, most investors recovered all of their Q4 losses as sentiment shifted and optimism dominated the US China trade negotiations. Nevertheless, many of the stocks that delivered strong returns in the first half still sport strong fundamentals and their gains were more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Grupo Televisa SAB (NYSE:TV) changed recently.
Is Grupo Televisa SAB (NYSE:TV) the right investment to pursue these days? Money managers are betting on the stock. The number of long hedge fund bets moved up by 2 recently. Our calculations also showed that TV isn't among the 30 most popular stocks among hedge funds.
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 40 percentage points since May 2014 through May 30, 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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a look at the key hedge fund action regarding Grupo Televisa SAB (NYSE:TV).
What have hedge funds been doing with Grupo Televisa SAB (NYSE:TV)?
At Q2's end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in TV over the last 16 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, FPR Partners, managed by Bob Peck and Andy Raab, holds the most valuable position in Grupo Televisa SAB (NYSE:TV). FPR Partners has a $297.2 million position in the stock, comprising 7.1% of its 13F portfolio. Sitting at the No. 2 spot is Bill & Melinda Gates Foundation Trust, led by Michael Larson, holding a $142.5 million position; 0.7% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism consist of Renaissance Technologies, Jonathon Jacobson's Highfields Capital Management and Scott Bessent's Key Square Capital Management.
Now, key money managers were breaking ground themselves. Key Square Capital Management, managed by Scott Bessent, assembled the most outsized position in Grupo Televisa SAB (NYSE:TV). Key Square Capital Management had $34.5 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also initiated a $12 million position during the quarter. The other funds with new positions in the stock are Howard Marks's Oaktree Capital Management, Matthew Tewksbury's Stevens Capital Management, and Dmitry Balyasny's Balyasny Asset Management.
Let's now review hedge fund activity in other stocks similar to Grupo Televisa SAB (NYSE:TV). These stocks are Qurate Retail, Inc. (NASDAQ:QRTEA), Capri Holdings Limited (NYSE:CPRI), XPO Logistics Inc (NYSE:XPO), and IDACORP Inc (NYSE:IDA). This group of stocks' market valuations are closest to TV's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QRTEA,33,639765,0 CPRI,35,808989,-2 XPO,24,2275608,-2 IDA,22,332483,4 Average,28.5,1014211,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $1014 million. That figure was $719 million in TV's case. Capri Holdings Limited (NYSE:CPRI) is the most popular stock in this table. On the other hand IDACORP Inc (NYSE:IDA) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Grupo Televisa SAB (NYSE:TV) is even less popular than IDA. Hedge funds clearly dropped the ball on TV as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks (view the video below) among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on TV as the stock returned 15.9% during the third quarter and outperformed the market by an even larger margin. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.