"October lived up to its scary reputation—the S&P 500 falling in the month by the largest amount in the last 40 years, the only worse Octobers being '08 and the Crash of '87. For perspective, there have been only 5 occasions in those 40 years when the S&P 500 declined by greater than 20% from peak to trough. Other than the '87 Crash, all were during recessions. There were 17 other instances, over the same time frame, when the market fell by over 10% but less than 20%. Furthermore, this is the 18th correction of 5% or more since the current bull market started in March '09. Corrections are the norm. They can be healthy as they often undo market complacency—overbought levels—potentially allowing the market to base and move even higher." This is how Trapeze Asset Management summarized the recent market moves in its investor letter. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards one of the stocks hedge funds invest in.
Hedge fund interest in GCI Liberty, Inc. (NASDAQ:GLIBA) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare GLIBA to other stocks including Envision Healthcare Holdings Inc (NYSE:EVHC), Philippine Long Distance Telephone (NYSE:PHI), and SCANA Corporation (NYSE:SCG) to get a better sense of its popularity.
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 flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_30647" align="aligncenter" width="478"] Boykin Curry of Eagle Capital[/caption]
We're going to analyze the key hedge fund action encompassing GCI Liberty, Inc. (NASDAQ:GLIBA).
Hedge fund activity in GCI Liberty, Inc. (NASDAQ:GLIBA)
At Q3's end, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GLIBA over the last 13 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Among these funds, FPR Partners held the most valuable stake in GCI Liberty, Inc. (NASDAQ:GLIBA), which was worth $444.2 million at the end of the third quarter. On the second spot was Eagle Capital Management, which amassed $266.2 million worth of shares. Moreover, Makaira Partners, D E Shaw, and Chieftain Capital were also bullish on GCI Liberty, Inc. (NASDAQ:GLIBA), allocating a large percentage of their portfolios to this stock.
Judging by the fact that GCI Liberty, Inc. (NASDAQ:GLIBA) has witnessed falling interest from hedge fund managers, logic holds that there lies a certain "tier" of fund managers that slashed their full holdings in the third quarter. It's worth mentioning that Curtis Macnguyen's Ivory Capital (Investment Mgmt) dropped the largest stake of the "upper crust" of funds watched by Insider Monkey, valued at an estimated $14 million in stock. Jim Simons's fund, Renaissance Technologies, also dumped its stock, about $11.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to GCI Liberty, Inc. (NASDAQ:GLIBA). We will take a look at Envision Healthcare Holdings Inc (NYSE:EVHC), PLDT Inc. (NYSE:PHI), SCANA Corporation (NYSE:SCG), and Universal Display Corporation (NASDAQ:OLED). This group of stocks' market caps are similar to GLIBA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EVHC,35,1409277,-3 PHI,3,70426,1 SCG,30,378589,11 OLED,20,192336,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $513 million. That figure was $1.64 billion in GLIBA's case. Envision Healthcare Holdings Inc (NYSE:EVHC) is the most popular stock in this table. On the other hand PLDT Inc. (NYSE:PHI) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks GCI Liberty, Inc. (NASDAQ:GLIBA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.