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Were Hedge Funds Right About Tegna Inc (TGNA)?

·5 min read

Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren't certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Tegna Inc (NYSE:TGNA) at the end of the third quarter and determine whether the smart money was really smart about this stock.

Is Tegna Inc (NYSE:TGNA) a bargain? Money managers were in an optimistic mood. The number of bullish hedge fund bets moved up by 19 lately. Tegna Inc (NYSE:TGNA) was in 37 hedge funds' portfolios at the end of September. The all time high for this statistic is 37. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TGNA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Millennium Management, Catapult Capital Management
Millennium Management, Catapult Capital Management

Israel Englander of Millennium Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let's check out the new hedge fund action encompassing Tegna Inc (NYSE:TGNA).

Do Hedge Funds Think TGNA Is A Good Stock To Buy Now?

At the end of September, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 106% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards TGNA over the last 25 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is TGNA A Good Stock To Buy?
Is TGNA A Good Stock To Buy?

Among these funds, Ariel Investments held the most valuable stake in Tegna Inc (NYSE:TGNA), which was worth $163.3 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $34.4 million worth of shares. AQR Capital Management, Millennium Management, and TIG Advisors 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 Alden Global Capital allocated the biggest weight to Tegna Inc (NYSE:TGNA), around 12.59% of its 13F portfolio. Harbert Management is also relatively very bullish on the stock, earmarking 7 percent of its 13F equity portfolio to TGNA.

As aggregate interest increased, key hedge funds were leading the bulls' herd. TIG Advisors, managed by Carl Tiedemann and Michael Tiedemann, assembled the most outsized position in Tegna Inc (NYSE:TGNA). TIG Advisors had $20 million invested in the company at the end of the quarter. Raymond J. Harbert's Harbert Management also initiated a $19.7 million position during the quarter. The following funds were also among the new TGNA investors: Steven Tananbaum's GoldenTree Asset Management, Eli Samaha's Madison Avenue Partners, and Chuck Royce's Royce & Associates.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Tegna Inc (NYSE:TGNA) but similarly valued. We will take a look at Coursera, Inc. (NYSE:COUR), American Eagle Outfitters Inc. (NYSE:AEO), Ortho Clinical Diagnostics Holdings plc (NASDAQ:OCDX), Fisker Inc. (NYSE:FSR), Qualys Inc (NASDAQ:QLYS), Healthcare Realty Trust Inc (NYSE:HR), and Arvinas, Inc. (NASDAQ:ARVN). This group of stocks' market values are closest to TGNA's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position COUR,25,173727,14 AEO,24,1208509,-17 OCDX,30,272834,9 FSR,15,228103,-1 QLYS,18,220919,-2 HR,18,210905,-1 ARVN,25,312887,-1 Average,22.1,375412,0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.1 hedge funds with bullish positions and the average amount invested in these stocks was $375 million. That figure was $420 million in TGNA's case. Ortho Clinical Diagnostics Holdings plc (NASDAQ:OCDX) is the most popular stock in this table. On the other hand Fisker Inc. (NYSE:FSR) is the least popular one with only 15 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 90. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, TGNA wasn't nearly as popular as these 5 stocks and hedge funds that were betting on TGNA were disappointed as the stock returned -1.4% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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