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Were Hedge Funds Right About Flocking Into Gray Television, Inc. (GTN) ?

Abigail Fisher

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund managers like Jeff Ubben, George Soros and Seth Klarman hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Gray Television, Inc. (NYSE:GTN) investors should be aware of an increase in hedge fund sentiment lately. Our calculations also showed that GTN isn't among the 30 most popular stocks among hedge funds.

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 market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ken Griffin CITADEL INVESTMENT GROUP

We're going to review the fresh hedge fund action regarding Gray Television, Inc. (NYSE:GTN).

How have hedgies been trading Gray Television, Inc. (NYSE:GTN)?

At Q4's end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from one quarter earlier. By comparison, 26 hedge funds held shares or bullish call options in GTN a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

GTN_apr2019

Among these funds, Darsana Capital Partners held the most valuable stake in Gray Television, Inc. (NYSE:GTN), which was worth $117.9 million at the end of the third quarter. On the second spot was Millennium Management which amassed $18.7 million worth of shares. Moreover, Citadel Investment Group, Sound Point Capital, and Meghalaya Partners were also bullish on Gray Television, Inc. (NYSE:GTN), allocating a large percentage of their portfolios to this stock.

With a general bullishness amongst the heavyweights, key money managers have jumped into Gray Television, Inc. (NYSE:GTN) headfirst. Meghalaya Partners, managed by Vasan Kesavan, Srikumar Kesavan and Sandeep Ramesh, created the most valuable position in Gray Television, Inc. (NYSE:GTN). Meghalaya Partners had $10 million invested in the company at the end of the quarter. Jim Simons's Renaissance Technologies also made a $9.4 million investment in the stock during the quarter. The following funds were also among the new GTN investors: Noam Gottesman's GLG Partners, David Costen Haley's HBK Investments, and John Overdeck and David Siegel's Two Sigma Advisors.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Gray Television, Inc. (NYSE:GTN) but similarly valued. These stocks are Oi SA (NYSE:OIBR), Asbury Automotive Group, Inc. (NYSE:ABG), Ferro Corporation (NYSE:FOE), and Hawaiian Holdings, Inc. (NASDAQ:HA). All of these stocks' market caps are closest to GTN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OIBR,21,380286,2 ABG,16,185184,-1 FOE,19,210568,1 HA,14,86673,0 Average,17.5,215678,0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $216 million. That figure was $215 million in GTN's case. Oi SA (NYSE:OIBR) is the most popular stock in this table. On the other hand Hawaiian Holdings, Inc. (NASDAQ:HA) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Gray Television, Inc. (NYSE:GTN) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on GTN as the stock returned 54.5% 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.

Disclosure: None. This article was originally published at Insider Monkey.

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