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 Clear Channel Outdoor Holdings, Inc. (NYSE:CCO).
Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) investors should be aware of a decrease in activity from the world's largest hedge funds of late. CCO was in 33 hedge funds' portfolios at the end of March. There were 42 hedge funds in our database with CCO holdings at the end of the previous quarter. Our calculations also showed that CCO 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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 51 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_364880" align="aligncenter" width="399"] Nathaniel August of Mangrove Partners[/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. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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. Now we're going to take a glance at the fresh hedge fund action surrounding Clear Channel Outdoor Holdings, Inc. (NYSE:CCO).
How are hedge funds trading Clear Channel Outdoor Holdings, Inc. (NYSE:CCO)?
Heading into the second quarter of 2020, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in CCO over the last 18 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Mason Capital Management was the largest shareholder of Clear Channel Outdoor Holdings, Inc. (NYSE:CCO), with a stake worth $19.5 million reported as of the end of September. Trailing Mason Capital Management was D E Shaw, which amassed a stake valued at $11.3 million. Brigade Capital, Rubric Capital Management, and Marathon Asset Management 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 6.19% of its 13F portfolio. Solus Alternative Asset Management is also relatively very bullish on the stock, earmarking 3.87 percent of its 13F equity portfolio to CCO.
Judging by the fact that Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) has witnessed declining sentiment from hedge fund managers, it's safe to say that there exists a select few fund managers who sold off their entire stakes heading into Q4. Interestingly, Victor Khosla's Strategic Value Partners dumped the largest investment of all the hedgies tracked by Insider Monkey, totaling about $17.4 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also cut its stock, about $3.6 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 9 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks similar to Clear Channel Outdoor Holdings, Inc. (NYSE:CCO). These stocks are Crossamerica Partners LP (NYSE:CAPL), NI Holdings, Inc. (NASDAQ:NODK), The Manitowoc Company, Inc. (NYSE:MTW), and MetroCity Bankshares, Inc. (NASDAQ:MCBS). This group of stocks' market caps are closest to CCO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CAPL,1,283,0 NODK,6,21289,-1 MTW,21,43912,4 MCBS,4,3819,0 Average,8,17326,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $83 million in CCO's case. The Manitowoc Company, Inc. (NYSE:MTW) is the most popular stock in this table. On the other hand Crossamerica Partners LP (NYSE:CAPL) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) is more popular among hedge funds. 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 returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on CCO as the stock returned 51.6% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.