While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, declining oil prices and the trade war with China, many smart money investors kept their optimism regarding the current bull run in the fourth quarter, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Liberty Media Corporation (NASDAQ:FWONA).
Liberty Media Corporation (NASDAQ:FWONA) investors should pay attention to a decrease in hedge fund sentiment recently. FWONA was in 19 hedge funds' portfolios at the end of December. There were 21 hedge funds in our database with FWONA positions at the end of the previous quarter. Our calculations also showed that FWONA isn't among the 30 most popular stocks among hedge funds.
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 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 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.
Let's check out the recent hedge fund action encompassing Liberty Media Corporation (NASDAQ:FWONA).
What have hedge funds been doing with Liberty Media Corporation (NASDAQ:FWONA)?
Heading into the first quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in FWONA 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.
More specifically, Ancient Art (Teton Capital) was the largest shareholder of Liberty Media Corporation (NASDAQ:FWONA), with a stake worth $75.6 million reported as of the end of September. Trailing Ancient Art (Teton Capital) was Southeastern Asset Management, which amassed a stake valued at $69.6 million. Odey Asset Management Group, Ashe Capital, and CQS Cayman LP were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Liberty Media Corporation (NASDAQ:FWONA) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there lies a certain "tier" of hedgies that decided to sell off their entire stakes in the third quarter. Intriguingly, Howard Marks's Oaktree Capital Management said goodbye to the largest investment of all the hedgies monitored by Insider Monkey, totaling an estimated $24.2 million in stock. Brian Ashford-Russell and Tim Woolley's fund, Polar Capital, also cut its stock, about $5.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds in the third quarter.
Let's now review hedge fund activity in other stocks similar to Liberty Media Corporation (NASDAQ:FWONA). We will take a look at KT Corporation (NYSE:KT), Erie Indemnity Company (NASDAQ:ERIE), GrubHub Inc (NYSE:GRUB), and Graco Inc. (NYSE:GGG). This group of stocks' market values resemble FWONA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KT,16,271168,7 ERIE,11,71198,-3 GRUB,23,860282,-15 GGG,18,196236,-4 Average,17,349721,-3.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $350 million. That figure was $272 million in FWONA's case. GrubHub Inc (NYSE:GRUB) is the most popular stock in this table. On the other hand Erie Indemnity Company (NASDAQ:ERIE) is the least popular one with only 11 bullish hedge fund positions. Liberty Media Corporation (NASDAQ:FWONA) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that the top 15 most popular stocks among hedge funds returned 21.3% year-to-date through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Hedge funds were also right about betting on FWONA, though not to the same extent, as the stock returned 19.6% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.