Is Meredith Corporation (NYSE:MDP) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is Meredith Corporation (NYSE:MDP) a bargain? Hedge funds are betting on the stock. The number of long hedge fund bets rose by 8 recently. Our calculations also showed that MDP isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). MDP was in 19 hedge funds' portfolios at the end of September. There were 11 hedge funds in our database with MDP positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (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_375529" align="aligncenter" width="450"] Mario Gabelli of GAMCO Investors[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to review the latest hedge fund action encompassing Meredith Corporation (NYSE:MDP).
What does smart money think about Meredith Corporation (NYSE:MDP)?
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 73% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in MDP a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in Meredith Corporation (NYSE:MDP) was held by Royce & Associates, which reported holding $84.9 million worth of stock at the end of September. It was followed by Ariel Investments with a $49.2 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and GAMCO Investors. In terms of the portfolio weights assigned to each position MFP Investors allocated the biggest weight to Meredith Corporation (NYSE:MDP), around 1.09% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.79 percent of its 13F equity portfolio to MDP.
As aggregate interest increased, some big names have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the largest position in Meredith Corporation (NYSE:MDP). Arrowstreet Capital had $15.8 million invested in the company at the end of the quarter. David E. Shaw's D E Shaw also made a $15.6 million investment in the stock during the quarter. The other funds with brand new MDP positions are Noam Gottesman's GLG Partners, Thomas E. Claugus's GMT Capital, and Michael Gelband's ExodusPoint Capital.
Let's now take a look at hedge fund activity in other stocks similar to Meredith Corporation (NYSE:MDP). These stocks are Kaman Corporation (NYSE:KAMN), Papa John's International, Inc. (NASDAQ:PZZA), Arcosa, Inc. (NYSE:ACA), and Focus Financial Partners Inc. (NASDAQ:FOCS). This group of stocks' market values are closest to MDP's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KAMN,19,248406,5 PZZA,24,382533,2 ACA,27,234791,3 FOCS,10,43591,1 Average,20,227330,2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $227 million. That figure was $275 million in MDP's case. Arcosa, Inc. (NYSE:ACA) is the most popular stock in this table. On the other hand Focus Financial Partners Inc. (NASDAQ:FOCS) is the least popular one with only 10 bullish hedge fund positions. Meredith Corporation (NYSE:MDP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately MDP wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MDP investors were disappointed as the stock returned -2.8% during the first two months of the fourth quarter 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 in Q4.
Disclosure: None. This article was originally published at Insider Monkey.