The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtThe E.W. Scripps Company (NASDAQ:SSP) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
The E.W. Scripps Company (NASDAQ:SSP) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 12 hedge funds' portfolios at the end of March. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Standex International Corp. (NYSE:SXI), Molecular Templates, Inc. (NASDAQ:MTEM), and Akero Therapeutics, Inc. (NASDAQ:AKRO) to gather more data points. Our calculations also showed that SSP isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_221563" align="aligncenter" width="387"] Jamie Zimmerman of Litespeed Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to take a gander at the new hedge fund action regarding The E.W. Scripps Company (NASDAQ:SSP).
How have hedgies been trading The E.W. Scripps Company (NASDAQ:SSP)?
At the end of the first quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SSP over the last 18 quarters. With hedge funds' capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Mario Gabelli's GAMCO Investors has the largest position in The E.W. Scripps Company (NASDAQ:SSP), worth close to $42.6 million, amounting to 0.5% of its total 13F portfolio. The second most bullish fund manager is Jeffrey Bronchick of Cove Street Capital, with a $18.6 million position; 3.8% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions contain David P. Cohen's Minerva Advisors, Jamie Zimmerman's Litespeed Management and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Litespeed Management allocated the biggest weight to The E.W. Scripps Company (NASDAQ:SSP), around 7.84% of its 13F portfolio. Cove Street Capital is also relatively very bullish on the stock, setting aside 3.81 percent of its 13F equity portfolio to SSP.
Judging by the fact that The E.W. Scripps Company (NASDAQ:SSP) has experienced bearish sentiment from hedge fund managers, we can see that there were a few hedge funds who were dropping their full holdings heading into Q4. It's worth mentioning that Jordan Moelis and Jeff Farroni's Deep Field Asset Management dropped the biggest investment of the "upper crust" of funds followed by Insider Monkey, worth about $1.3 million in stock. Minhua Zhang's fund, Weld Capital Management, also cut its stock, about $1.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as The E.W. Scripps Company (NASDAQ:SSP) but similarly valued. We will take a look at Standex International Corp. (NYSE:SXI), Molecular Templates, Inc. (NASDAQ:MTEM), Akero Therapeutics, Inc. (NASDAQ:AKRO), and Axcelis Technologies Inc (NASDAQ:ACLS). This group of stocks' market caps resemble SSP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SXI,9,20088,-3 MTEM,17,142757,-3 AKRO,14,112061,5 ACLS,13,81385,1 Average,13.25,89073,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $74 million in SSP's case. Molecular Templates, Inc. (NASDAQ:MTEM) is the most popular stock in this table. On the other hand Standex International Corp. (NYSE:SXI) is the least popular one with only 9 bullish hedge fund positions. The E.W. Scripps Company (NASDAQ:SSP) 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately SSP wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); SSP investors were disappointed as the stock returned 16.8% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.