At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards News Corp (NASDAQ:NWSA).
Is News Corp (NASDAQ:NWSA) the right pick for your portfolio? Investors who are in the know are turning bullish. The number of bullish hedge fund positions moved up by 2 lately. Our calculations also showed that NWSA 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_26262" align="aligncenter" width="359"] Steven Cohen of Point72 Asset Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one as well as this tiny lithium play. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to go over the latest hedge fund action surrounding News Corp (NASDAQ:NWSA).
What have hedge funds been doing with News Corp (NASDAQ:NWSA)?
At the end of the first quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. By comparison, 21 hedge funds held shares or bullish call options in NWSA a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in News Corp (NASDAQ:NWSA) was held by Yacktman Asset Management, which reported holding $194.2 million worth of stock at the end of September. It was followed by General Equity Partners with a $22 million position. Other investors bullish on the company included AQR Capital Management, D E Shaw, and Contrarius Investment Management. In terms of the portfolio weights assigned to each position General Equity Partners allocated the biggest weight to News Corp (NASDAQ:NWSA), around 14.37% of its 13F portfolio. Solas Capital Management is also relatively very bullish on the stock, earmarking 8.87 percent of its 13F equity portfolio to NWSA.
As industrywide interest jumped, some big names were breaking ground themselves. Contrarius Investment Management, managed by Stephen Mildenhall, created the largest position in News Corp (NASDAQ:NWSA). Contrarius Investment Management had $10.7 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $1.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Steve Cohen's Point72 Asset Management, Matthew Hulsizer's PEAK6 Capital Management, and Paul Tudor Jones's Tudor Investment Corp.
Let's go over hedge fund activity in other stocks similar to News Corp (NASDAQ:NWSA). These stocks are PRA Health Sciences Inc (NASDAQ:PRAH), Reinsurance Group of America Inc (NYSE:RGA), Vereit Inc (NYSE:VER), and Healthcare Trust Of America Inc (NYSE:HTA). This group of stocks' market valuations are closest to NWSA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PRAH,29,189694,-9 RGA,30,275843,3 VER,18,314967,-10 HTA,16,106529,5 Average,23.25,221758,-2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $222 million. That figure was $297 million in NWSA's case. Reinsurance Group of America Inc (NYSE:RGA) is the most popular stock in this table. On the other hand Healthcare Trust Of America Inc (NYSE:HTA) is the least popular one with only 16 bullish hedge fund positions. News Corp (NASDAQ:NWSA) is not the most popular stock in this group but hedge fund interest is still above average. 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on NWSA as the stock returned 36.4% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.