Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Fox Corporation (NASDAQ:FOX) based on that data and determine whether they were really smart about the stock.
Is Fox Corporation (NASDAQ:FOX) a bargain? Prominent investors were becoming less hopeful. The number of long hedge fund bets decreased by 2 in recent months. Fox Corporation (NASDAQ:FOX) was in 20 hedge funds' portfolios at the end of June. The all time high for this statistics is 49. Our calculations also showed that FOX 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 financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Donald Yacktman of Yacktman Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now let's check out the new hedge fund action regarding Fox Corporation (NASDAQ:FOX).
What have hedge funds been doing with Fox Corporation (NASDAQ:FOX)?
At Q2's end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from one quarter earlier. On the other hand, there were a total of 30 hedge funds with a bullish position in FOX a year ago. With the smart money's sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds, Yacktman Asset Management held the most valuable stake in Fox Corporation (NASDAQ:FOX), which was worth $279.9 million at the end of the third quarter. On the second spot was Baupost Group which amassed $152.5 million worth of shares. Renaissance Technologies, GAMCO Investors, and 3G Sahana Capital 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 MIC Capital Partners allocated the biggest weight to Fox Corporation (NASDAQ:FOX), around 5.83% of its 13F portfolio. Yacktman Asset Management is also relatively very bullish on the stock, designating 4.46 percent of its 13F equity portfolio to FOX.
Since Fox Corporation (NASDAQ:FOX) has experienced a decline in interest from the aggregate hedge fund industry, logic holds that there were a few money managers that elected to cut their full holdings heading into Q3. At the top of the heap, Jonathan Esfandi's JNE Partners dropped the biggest stake of the "upper crust" of funds tracked by Insider Monkey, worth about $22.6 million in stock. Michael Doheny's fund, Freshford Capital Management, also sold off its stock, about $15.3 million worth. These moves are important to note, as total hedge fund interest was cut by 2 funds heading into Q3.
Let's now take a look at hedge fund activity in other stocks similar to Fox Corporation (NASDAQ:FOX). We will take a look at Fox Corporation (NASDAQ:FOXA), Maxim Integrated Products Inc. (NASDAQ:MXIM), Laboratory Corp. of America Holdings (NYSE:LH), Amcor plc (NYSE:AMCR), Pioneer Natural Resources Company (NYSE:PXD), Bilibili Inc. (NASDAQ:BILI), and Hess Corporation (NYSE:HES). This group of stocks' market caps are closest to FOX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FOXA,35,1611691,-3 MXIM,33,323780,3 LH,52,1579826,7 AMCR,16,201571,-3 PXD,35,341030,-5 BILI,29,1375236,5 HES,28,335349,0 Average,32.6,824069,0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.6 hedge funds with bullish positions and the average amount invested in these stocks was $824 million. That figure was $566 million in FOX's case. Laboratory Corp. of America Holdings (NYSE:LH) is the most popular stock in this table. On the other hand Amcor plc (NYSE:AMCR) is the least popular one with only 16 bullish hedge fund positions. Fox Corporation (NASDAQ:FOX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FOX is 15.2. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately FOX wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); FOX investors were disappointed as the stock returned 5.1% in the third 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.