We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) and determine whether hedge funds skillfully traded this stock.
Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) shareholders have witnessed a decrease in activity from the world's largest hedge funds recently. Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) was in 27 hedge funds' portfolios at the end of June. The all time high for this statistics is 44. There were 33 hedge funds in our database with CCO holdings at the end of March. Our calculations also showed that CCO isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
In the eyes of most shareholders, hedge funds are seen as underperforming, outdated financial tools of years past. While there are over 8000 funds with their doors open today, We look at the masters of this club, around 850 funds. Most estimates calculate that this group of people handle the lion's share of all hedge funds' total asset base, and by tailing their unrivaled picks, Insider Monkey has identified various investment strategies that have historically defeated the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Sander Gerber of Hudson Bay Capital Management
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How are hedge funds trading Clear Channel Outdoor Holdings, Inc. (NYSE:CCO)?
Heading into the third quarter of 2020, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CCO over the last 20 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Mason Capital Management held the most valuable stake in Clear Channel Outdoor Holdings, Inc. (NYSE:CCO), which was worth $31.7 million at the end of the third quarter. On the second spot was Brigade Capital which amassed $19.4 million worth of shares. D E Shaw, Rubric Capital Management, and Contrarian Capital 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 3.05% of its 13F portfolio. Sound Point Capital is also relatively very bullish on the stock, dishing out 2.43 percent of its 13F equity portfolio to CCO.
Judging by the fact that Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) has faced bearish sentiment from the aggregate hedge fund industry, it's easy to see that there is a sect of fund managers that elected to cut their full holdings heading into Q3. It's worth mentioning that Bruce J. Richards and Louis Hanover's Marathon Asset Management said goodbye to the largest stake of the "upper crust" of funds watched by Insider Monkey, comprising close to $4.4 million in stock. Frank Brosens's fund, Taconic Capital, also said goodbye to its stock, about $2 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 6 funds heading into Q3.
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 TransMedics Group, Inc. (NASDAQ:TMDX), MRC Global Inc (NYSE:MRC), Par Pacific Holdings, Inc. (NYSE:PARR), AC Immune SA (NASDAQ:ACIU), TCG BDC, Inc. (NASDAQ:CGBD), DBV Technologies SA (NASDAQ:DBVT), and The First Bancshares, Inc. (NASDAQ:FBMS). This group of stocks' market caps match CCO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TMDX,6,85056,3 MRC,18,33006,1 PARR,14,81939,-4 ACIU,10,95458,-1 CGBD,8,27806,1 DBVT,8,124910,-2 FBMS,8,24775,3 Average,10.3,67564,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.3 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $123 million in CCO's case. MRC Global Inc (NYSE:MRC) is the most popular stock in this table. On the other hand TransMedics Group, Inc. (NASDAQ:TMDX) is the least popular one with only 6 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 67.4. 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 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 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. Unfortunately CCO wasn't nearly as popular as these 10 stocks and hedge funds that were betting on CCO were disappointed as the stock returned -9.6% since the end of 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.