How do we determine whether Liberty Media Corporation (NASDAQ:BATRA) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Liberty Media Corporation (NASDAQ:BATRA) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds' portfolios at the end of September. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as New York Mortgage Trust, Inc. (NASDAQ:NYMT), M/A-COM Technology Solutions Holdings (NASDAQ:MTSI), and Atkore International Group Inc. (NYSE:ATKR) to gather more data points. Our calculations also showed that BATRA 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.
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. Let's analyze the new hedge fund action regarding Liberty Media Corporation (NASDAQ:BATRA).
How have hedgies been trading Liberty Media Corporation (NASDAQ:BATRA)?
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BATRA over the last 17 quarters. With hedgies' capital changing hands, there exists a few key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, GAMCO Investors was the largest shareholder of Liberty Media Corporation (NASDAQ:BATRA), with a stake worth $39.7 million reported as of the end of September. Trailing GAMCO Investors was Park West Asset Management, which amassed a stake valued at $18.3 million. Renaissance Technologies, Horizon Asset Management, and Deep Field Asset 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 Park West Asset Management allocated the biggest weight to Liberty Media Corporation (NASDAQ:BATRA), around 0.89% of its 13F portfolio. Potrero Capital Research is also relatively very bullish on the stock, earmarking 0.43 percent of its 13F equity portfolio to BATRA.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's go over hedge fund activity in other stocks similar to Liberty Media Corporation (NASDAQ:BATRA). We will take a look at New York Mortgage Trust, Inc. (NASDAQ:NYMT), M/A-COM Technology Solutions Holdings (NASDAQ:MTSI), Atkore International Group Inc. (NYSE:ATKR), and The RMR Group Inc. (NASDAQ:RMR). This group of stocks' market values match BATRA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NYMT,10,25762,0 MTSI,14,197407,-3 ATKR,19,104150,2 RMR,20,186711,-2 Average,15.75,128508,-0.75 [/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 $129 million. That figure was $69 million in BATRA's case. The RMR Group Inc. (NASDAQ:RMR) is the most popular stock in this table. On the other hand New York Mortgage Trust, Inc. (NASDAQ:NYMT) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Liberty Media Corporation (NASDAQ:BATRA) is even less popular than NYMT. Hedge funds dodged a bullet by taking a bearish stance towards BATRA. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BATRA wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BATRA investors were disappointed as the stock returned 2% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.