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Hedge Funds Have Never Been This Bullish On Outfront Media Inc (OUT)

Abigail Fisher

The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Outfront Media Inc (NYSE:OUT).

Outfront Media Inc (NYSE:OUT) was in 25 hedge funds' portfolios at the end of the first quarter of 2019. OUT investors should be aware of an increase in support from the world's most elite money managers lately. There were 17 hedge funds in our database with OUT positions at the end of the previous quarter. Our calculations also showed that OUT isn't among the 30 most popular stocks among hedge funds.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 40 percentage points since May 2014 through May 30, 2019 (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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

[caption id="attachment_30576" align="aligncenter" width="501"] Glenn Russell Dubin of Highbridge Capital[/caption]

HIGHBRIDGE CAPITAL MANAGEMENT

Let's take a look at the new hedge fund action regarding Outfront Media Inc (NYSE:OUT).

How have hedgies been trading Outfront Media Inc (NYSE:OUT)?

Heading into the second quarter of 2019, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 47% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in OUT a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

OUT_june2019

Among these funds, Renaissance Technologies held the most valuable stake in Outfront Media Inc (NYSE:OUT), which was worth $68.5 million at the end of the first quarter. On the second spot was Point72 Asset Management which amassed $60.2 million worth of shares. Moreover, Echo Street Capital Management, Millennium Management, and Balyasny Asset Management were also bullish on Outfront Media Inc (NYSE:OUT), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Highbridge Capital Management, managed by Glenn Russell Dubin, created the largest position in Outfront Media Inc (NYSE:OUT). Highbridge Capital Management had $13.2 million invested in the company at the end of the quarter. Robert Joseph Caruso's Select Equity Group also made a $9 million investment in the stock during the quarter. The other funds with brand new OUT positions are Brad Dunkley and Blair Levinsky's Waratah Capital Advisors, Minhua Zhang's Weld Capital Management, and Peter Algert and Kevin Coldiron's Algert Coldiron Investors.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Outfront Media Inc (NYSE:OUT) but similarly valued. We will take a look at BankUnited, Inc. (NYSE:BKU), Sunstone Hotel Investors Inc (NYSE:SHO), Tetra Tech, Inc. (NASDAQ:TTEK), and MFA Financial, Inc. (NYSE:MFA). This group of stocks' market valuations resemble OUT's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BKU,19,536410,-2 SHO,20,156169,4 TTEK,23,58316,-2 MFA,16,130476,-2 Average,19.5,220343,-0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $220 million. That figure was $335 million in OUT's case. Tetra Tech, Inc. (NASDAQ:TTEK) is the most popular stock in this table. On the other hand MFA Financial, Inc. (NYSE:MFA) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Outfront Media Inc (NYSE:OUT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on OUT as the stock returned 6.3% during the same period 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.

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