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Were Hedge Funds Right About Warming Up To NWSA?

Abigail Fisher

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 28. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards News Corp (NASDAQ:NWSA).

News Corp (NASDAQ:NWSA) was in 23 hedge funds' portfolios at the end of the second quarter of 2019. NWSA investors should pay attention to an increase in hedge fund interest lately. There were 21 hedge funds in our database with NWSA holdings at the end of the previous quarter. Our calculations also showed that NWSA isn't among the 30 most popular stocks among hedge funds.

If you'd ask most traders, hedge funds are seen as unimportant, outdated financial tools of years past. While there are more than 8000 funds with their doors open at present, We hone in on the top tier of this group, approximately 750 funds. It is estimated that this group of investors control most of all hedge funds' total asset base, and by tailing their top investments, Insider Monkey has spotted a few investment strategies that have historically defeated the market. Insider Monkey's flagship hedge fund strategy beat the S&P 500 index by around 5 percentage points per year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

Donald Yacktman

Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's go over the latest hedge fund action surrounding News Corp (NASDAQ:NWSA).

What have hedge funds been doing with News Corp (NASDAQ:NWSA)?

At Q2's end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the previous quarter. On the other hand, there were a total of 25 hedge funds with a bullish position in NWSA a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

NWSA_oct2019

More specifically, International Value Advisers was the largest shareholder of News Corp (NASDAQ:NWSA), with a stake worth $110.1 million reported as of the end of March. Trailing International Value Advisers was Pzena Investment Management, which amassed a stake valued at $68.9 million. D E Shaw, AQR Capital Management, and Yacktman Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.

Consequently, some big names were leading the bulls' herd. Yacktman Asset Management, managed by Donald Yacktman, established the most valuable position in News Corp (NASDAQ:NWSA). Yacktman Asset Management had $20.4 million invested in the company at the end of the quarter. Renaissance Technologies also made a $11.8 million investment in the stock during the quarter. The other funds with brand new NWSA positions are David Harding's Winton Capital Management, Israel Englander's Millennium Management, and Ken Griffin's Citadel Investment Group.

Let's now take a look at hedge fund activity in other stocks similar to News Corp (NASDAQ:NWSA). These stocks are Fortune Brands Home & Security Inc (NYSE:FBHS), Bruker Corporation (NASDAQ:BRKR), A. O. Smith Corporation (NYSE:AOS), and Sociedad Quimica y Minera de Chile S.A. (NYSE:SQM). This group of stocks' market valuations match NWSA's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FBHS,31,642699,2 BRKR,27,521013,2 AOS,22,512410,-5 SQM,7,23441,-2 Average,21.75,424891,-0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $425 million. That figure was $351 million in NWSA's case. Fortune Brands Home & Security Inc (NYSE:FBHS) is the most popular stock in this table. On the other hand Sociedad Quimica y Minera de Chile S.A. (NYSE:SQM) is the least popular one with only 7 bullish hedge fund positions. News Corp (NASDAQ:NWSA) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks (see the video below) among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on NWSA, though not to the same extent, as the stock returned 3.9% during the third quarter and outperformed the market as well.

5 Most Popular Stocks Among Hedge Funds

Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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