We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Tribune Publishing Company (NASDAQ:TPCO).
Is Tribune Publishing Company (NASDAQ:TPCO) an outstanding stock to buy now? The best stock pickers are buying. The number of bullish hedge fund bets moved up by 2 recently. Our calculations also showed that TPCO 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_27676" align="aligncenter" width="355"] Israel Englander of Millennium 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 based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We're going to go over the fresh hedge fund action encompassing Tribune Publishing Company (NASDAQ:TPCO).
How have hedgies been trading Tribune Publishing Company (NASDAQ:TPCO)?
Heading into the fourth quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the second quarter of 2019. On the other hand, there were a total of 14 hedge funds with a bullish position in TPCO a year ago. With hedge funds' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Tribune Publishing Company (NASDAQ:TPCO) was held by Renaissance Technologies, which reported holding $5.8 million worth of stock at the end of September. It was followed by Intrinsic Edge Capital with a $2.1 million position. Other investors bullish on the company included Arrowstreet Capital, Act II Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Act II Capital allocated the biggest weight to Tribune Publishing Company (NASDAQ:TPCO), around 0.99% of its 13F portfolio. Fondren Management is also relatively very bullish on the stock, earmarking 0.57 percent of its 13F equity portfolio to TPCO.
Now, specific money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, created the largest position in Tribune Publishing Company (NASDAQ:TPCO). Millennium Management had $0.8 million invested in the company at the end of the quarter. Jeremy Carton and Gilbert Li's Alta Fundamental Advisers also initiated a $0.4 million position during the quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Tribune Publishing Company (NASDAQ:TPCO) but similarly valued. We will take a look at Great Ajax Corp (NYSE:AJX), Nathan's Famous, Inc. (NASDAQ:NATH), Irsa Inversiones y Rprsntcins SA (NYSE:IRS), and BlueLinx Holdings Inc. (NYSE:BXC). This group of stocks' market values are similar to TPCO's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AJX,8,18528,0 NATH,4,39575,-2 IRS,10,23583,4 BXC,9,127445,2 Average,7.75,52283,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $15 million in TPCO's case. Irsa Inversiones y Rprsntcins SA (NYSE:IRS) is the most popular stock in this table. On the other hand Nathan's Famous, Inc. (NASDAQ:NATH) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Tribune Publishing Company (NASDAQ:TPCO) is more popular among hedge funds. 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. Hedge funds were also right about betting on TPCO as the stock returned 49.2% during the first two months of Q4 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.