Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by nearly 10 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Townsquare Media Inc (NYSE:TSQ).
Is Townsquare Media Inc (NYSE:TSQ) a worthy investment right now? Money managers are selling. The number of bullish hedge fund bets were cut by 1 lately. Our calculations also showed that TSQ isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are tons of metrics stock market investors employ to analyze their holdings. A duo of the best metrics are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform the market by a solid amount (see the details here).
[caption id="attachment_30614" align="alignnone" width="600"] Howard Marks of Oaktree Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind let's analyze the fresh hedge fund action surrounding Townsquare Media Inc (NYSE:TSQ).
What does smart money think about Townsquare Media Inc (NYSE:TSQ)?
At Q3's end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in TSQ a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, MSD Capital was the largest shareholder of Townsquare Media Inc (NYSE:TSQ), with a stake worth $11.5 million reported as of the end of September. Trailing MSD Capital was Oaktree Capital Management, which amassed a stake valued at $11.2 million. Renaissance Technologies, GAMCO Investors, and Two Sigma Advisors 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 MSD Capital allocated the biggest weight to Townsquare Media Inc (NYSE:TSQ), around 3.73% of its 13F portfolio. Oaktree Capital Management is also relatively very bullish on the stock, earmarking 0.22 percent of its 13F equity portfolio to TSQ.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified TSQ as a viable investment and initiated a position in the stock.
Let's now review hedge fund activity in other stocks similar to Townsquare Media Inc (NYSE:TSQ). These stocks are Tyme Technologies, Inc. (NASDAQ:TYME), Orion Marine Group, Inc. (NYSE:ORN), Condor Hospitality Trust, Inc. (NASDAQ:CDOR), and Mustang Bio, Inc. (NASDAQ:MBIO). All of these stocks' market caps resemble TSQ's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TYME,6,2841,0 ORN,7,9906,1 CDOR,5,5777,3 MBIO,6,15947,0 Average,6,8618,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $27 million in TSQ's case. Orion Marine Group, Inc. (NYSE:ORN) is the most popular stock in this table. On the other hand Condor Hospitality Trust, Inc. (NASDAQ:CDOR) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Townsquare Media Inc (NYSE:TSQ) is even less popular than CDOR. Hedge funds clearly dropped the ball on TSQ as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on TSQ as the stock returned 17.1% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.