Hedge fund managers like David Einhorn, Bill Ackman, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Tribune Publishing Company (NASDAQ:TPCO).
Tribune Publishing Company (NASDAQ:TPCO) was in 12 hedge funds' portfolios at the end of March. TPCO investors should be aware of a decrease in hedge fund interest of late. There were 14 hedge funds in our database with TPCO positions at the end of the previous quarter. Our calculations also showed that tpco 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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 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 view the recent hedge fund action encompassing Tribune Publishing Company (NASDAQ:TPCO).
How are hedge funds trading Tribune Publishing Company (NASDAQ:TPCO)?
At Q1's end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TPCO over the last 15 quarters. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Tribune Publishing Company (NASDAQ:TPCO), which was worth $7.6 million at the end of the first quarter. On the second spot was Ancora Advisors which amassed $2.9 million worth of shares. Moreover, Citadel Investment Group, Fondren Management, and Act II Capital were also bullish on Tribune Publishing Company (NASDAQ:TPCO), allocating a large percentage of their portfolios to this stock.
Since Tribune Publishing Company (NASDAQ:TPCO) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there lies a certain "tier" of money managers who sold off their full holdings heading into Q3. At the top of the heap, David Rosen's Rubric Capital Management dumped the biggest position of the 700 funds monitored by Insider Monkey, totaling an estimated $1.7 million in stock. Israel Englander's fund, Millennium Management, also dumped its stock, about $0.5 million worth. These moves are interesting, as aggregate hedge fund interest fell by 2 funds heading into Q3.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Tribune Publishing Company (NASDAQ:TPCO) but similarly valued. We will take a look at International Money Express, Inc. (NASDAQ:IMXI), ShotSpotter, Inc. (NASDAQ:SSTI), Ladenburg Thalmann Financial Services Inc. (NYSE:LTS), and Sprague Resources LP (NYSE:SRLP). All of these stocks' market caps resemble TPCO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IMXI,11,73360,1 SSTI,7,18488,1 LTS,9,3762,3 SRLP,2,292,1 Average,7.25,23976,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $16 million in TPCO's case. International Money Express, Inc. (NASDAQ:IMXI) is the most popular stock in this table. On the other hand Sprague Resources LP (NYSE:SRLP) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Tribune Publishing Company (NASDAQ:TPCO) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately TPCO wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TPCO were disappointed as the stock returned -16.2% 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 in Q2.
Disclosure: None. This article was originally published at Insider Monkey.