Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of March. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is New Media Investment Group Inc (NYSE:NEWM), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Hedge fund interest in New Media Investment Group Inc (NYSE:NEWM) 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 NEWM to other stocks including Photronics, Inc. (NASDAQ:PLAB), Kura Oncology, Inc. (NASDAQ:KURA), and Acorda Therapeutics Inc (NASDAQ:ACOR) to get a better sense of its popularity.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a gander at the key hedge fund action surrounding New Media Investment Group Inc (NYSE:NEWM).
How have hedgies been trading New Media Investment Group Inc (NYSE:NEWM)?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in NEWM a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Omega Advisors, managed by Leon Cooperman, holds the largest position in New Media Investment Group Inc (NYSE:NEWM). Omega Advisors has a $26.7 million position in the stock, comprising 1.6% of its 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, led by Ken Griffin, holding a $6.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism contain Israel Englander's Millennium Management, Jim Simons's Renaissance Technologies and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Because New Media Investment Group Inc (NYSE:NEWM) has faced falling interest from hedge fund managers, we can see that there was a specific group of hedge funds who sold off their positions entirely by the end of the third quarter. At the top of the heap, Lee Ainslie's Maverick Capital said goodbye to the biggest investment of all the hedgies monitored by Insider Monkey, comprising an estimated $7.2 million in stock, and Benjamin A. Smith's Laurion Capital Management was right behind this move, as the fund dropped about $0.4 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as New Media Investment Group Inc (NYSE:NEWM) but similarly valued. We will take a look at Photronics, Inc. (NASDAQ:PLAB), Kura Oncology, Inc. (NASDAQ:KURA), Acorda Therapeutics Inc (NASDAQ:ACOR), and Clean Energy Fuels Corp (NASDAQ:CLNE). This group of stocks' market values match NEWM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PLAB,13,67607,-3 KURA,17,207125,2 ACOR,22,161061,0 CLNE,11,32009,3 Average,15.75,116951,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $117 million. That figure was $48 million in NEWM's case. Acorda Therapeutics Inc (NASDAQ:ACOR) is the most popular stock in this table. On the other hand Clean Energy Fuels Corp (NASDAQ:CLNE) is the least popular one with only 11 bullish hedge fund positions. New Media Investment Group Inc (NYSE:NEWM) 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 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. Unfortunately NEWM wasn't nearly as popular as these 20 stocks and hedge funds that were betting on NEWM were disappointed as the stock returned -10.9% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.