At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of December 31. In this article, we will use that wealth of knowledge to determine whether or not Entercom Communications Corp. (NYSE:ETM) makes for a good investment right now.
Entercom Communications Corp. (NYSE:ETM) has seen an increase in activity from the world's largest hedge funds lately. Our calculations also showed that etm 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 32 percentage points since May 2014 through March 12, 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.
We're going to review the latest hedge fund action regarding Entercom Communications Corp. (NYSE:ETM).
What does the smart money think about Entercom Communications Corp. (NYSE:ETM)?
Heading into the first quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from one quarter earlier. On the other hand, there were a total of 19 hedge funds with a bullish position in ETM a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Scopia Capital held the most valuable stake in Entercom Communications Corp. (NYSE:ETM), which was worth $33.6 million at the end of the fourth quarter. On the second spot was Sessa Capital which amassed $29.7 million worth of shares. Moreover, Harbor Spring Capital, Tensile Capital, and Point72 Asset Management were also bullish on Entercom Communications Corp. (NYSE:ETM), allocating a large percentage of their portfolios to this stock.
Consequently, key money managers have jumped into Entercom Communications Corp. (NYSE:ETM) headfirst. Renaissance Technologies, managed by Jim Simons, created the biggest position in Entercom Communications Corp. (NYSE:ETM). Renaissance Technologies had $1.2 million invested in the company at the end of the quarter. Mike Vranos's Ellington also initiated a $0.1 million position during the quarter. The only other fund with a brand new ETM position is Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's now take a look at hedge fund activity in other stocks similar to Entercom Communications Corp. (NYSE:ETM). These stocks are PlayAGS, Inc. (NYSE:AGS), Adecoagro SA (NYSE:AGRO), Solar Capital Ltd. (NASDAQ:SLRC), and Globalstar, Inc. (NYSE:GSAT). All of these stocks' market caps resemble ETM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AGS,11,71998,-4 AGRO,17,186196,1 SLRC,12,46473,1 GSAT,12,141376,-10 Average,13,111511,-3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $112 million. That figure was $120 million in ETM's case. Adecoagro SA (NYSE:AGRO) is the most popular stock in this table. On the other hand PlayAGS, Inc. (NYSE:AGS) is the least popular one with only 11 bullish hedge fund positions. Entercom Communications Corp. (NYSE:ETM) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately ETM wasn't nearly as popular as these 15 stock and hedge funds that were betting on ETM were disappointed as the stock returned 9.1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.