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Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Tegna Inc (NYSE:TGNA).
Is TGNA stock a buy? Tegna Inc (NYSE:TGNA) shareholders have witnessed an increase in support from the world's most elite money managers in recent months. Tegna Inc (NYSE:TGNA) was in 34 hedge funds' portfolios at the end of December. The all time high for this statistic is 37. Our calculations also showed that TGNA isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
Barry Rosenstein of JANA Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let's go over the new hedge fund action regarding Tegna Inc (NYSE:TGNA).
Do Hedge Funds Think TGNA Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 26% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in TGNA over the last 22 quarters. With the smart money's sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Ariel Investments was the largest shareholder of Tegna Inc (NYSE:TGNA), with a stake worth $105.4 million reported as of the end of December. Trailing Ariel Investments was Fairpointe Capital, which amassed a stake valued at $23.9 million. JANA Partners, Citadel Investment Group, and AQR Capital 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 Litespeed Management allocated the biggest weight to Tegna Inc (NYSE:TGNA), around 4.79% of its 13F portfolio. Fairpointe Capital is also relatively very bullish on the stock, designating 4.38 percent of its 13F equity portfolio to TGNA.
As industrywide interest jumped, key hedge funds were leading the bulls' herd. JANA Partners, managed by Barry Rosenstein, created the most outsized position in Tegna Inc (NYSE:TGNA). JANA Partners had $23.8 million invested in the company at the end of the quarter. Renaissance Technologies also made a $10.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Louis Bacon's Moore Global Investments, and John Overdeck and David Siegel's Two Sigma Advisors.
Let's go over hedge fund activity in other stocks similar to Tegna Inc (NYSE:TGNA). We will take a look at ChampionX Corporation (NASDAQ:CHX), Nektar Therapeutics (NASDAQ:NKTR), MakeMyTrip Limited (NASDAQ:MMYT), Eastern Bankshares, Inc. (NASDAQ:EBC), Axsome Therapeutics, Inc. (NASDAQ:AXSM), Resideo Technologies, Inc. (NYSE:REZI), and Corcept Therapeutics Incorporated (NASDAQ:CORT). This group of stocks' market valuations resemble TGNA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CHX,30,563624,3 NKTR,19,225959,-2 MMYT,7,62142,-3 EBC,16,104861,16 AXSM,22,523823,2 REZI,31,628339,8 CORT,20,340663,-2 Average,20.7,349916,3.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.7 hedge funds with bullish positions and the average amount invested in these stocks was $350 million. That figure was $286 million in TGNA's case. Resideo Technologies, Inc. (NYSE:REZI) is the most popular stock in this table. On the other hand MakeMyTrip Limited (NASDAQ:MMYT) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Tegna Inc (NYSE:TGNA) is more popular among hedge funds. Our overall hedge fund sentiment score for TGNA is 87.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 7.9% in 2021 through April 1st but still managed to beat the market by 0.4 percentage points. Hedge funds were also right about betting on TGNA as the stock returned 40.3% since the end of December (through 4/1) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.