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Where Do Hedge Funds Stand On Discovery Inc. (DISCA)?

·5 min read

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Discovery Inc. (NASDAQ:DISCA).

Discovery Inc. (NASDAQ:DISCA) was in 42 hedge funds' portfolios at the end of September. The all time high for this statistic is 48. DISCA investors should be aware of a decrease in activity from the world's largest hedge funds recently. There were 44 hedge funds in our database with DISCA positions at the end of the second quarter. Our calculations also showed that DISCA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Matthew Hulsizer PEAK6 Capital
Matthew Hulsizer PEAK6 Capital

Matthew Hulsizer of PEAK6 Capital

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. With all of this in mind we're going to take a gander at the latest hedge fund action encompassing Discovery Inc. (NASDAQ:DISCA).

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

Heading into the fourth quarter of 2021, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the second quarter of 2021. On the other hand, there were a total of 29 hedge funds with a bullish position in DISCA a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is DISCA A Good Stock To Buy?
Is DISCA A Good Stock To Buy?

More specifically, Brahman Capital was the largest shareholder of Discovery Inc. (NASDAQ:DISCA), with a stake worth $75.6 million reported as of the end of September. Trailing Brahman Capital was Two Sigma Advisors, which amassed a stake valued at $69.1 million. Laurion Capital Management, Balyasny Asset Management, and Marshall Wace LLP 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 Nokota Management allocated the biggest weight to Discovery Inc. (NASDAQ:DISCA), around 19.05% of its 13F portfolio. Quaker Capital Investments is also relatively very bullish on the stock, dishing out 9.95 percent of its 13F equity portfolio to DISCA.

Due to the fact that Discovery Inc. (NASDAQ:DISCA) has witnessed bearish sentiment from the smart money, logic holds that there is a sect of fund managers who sold off their positions entirely last quarter. Intriguingly, John Paulson's Paulson & Co sold off the biggest stake of the 750 funds monitored by Insider Monkey, worth about $26.3 million in call options. Israel Englander's fund, Millennium Management, also said goodbye to its call options, about $25.5 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 2 funds last quarter.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Discovery Inc. (NASDAQ:DISCA) but similarly valued. We will take a look at Whirlpool Corporation (NYSE:WHR), Santander Consumer USA Holdings Inc (NYSE:SC), Aluminum Corp. of China Limited (NYSE:ACH), Kimco Realty Corp (NYSE:KIM), Floor & Decor Holdings, Inc. (NYSE:FND), DENTSPLY SIRONA Inc. (NASDAQ:XRAY), and Korea Electric Power Corporation (NYSE:KEP). This group of stocks' market values resemble DISCA's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WHR,29,1134128,-3 SC,18,752098,-8 ACH,7,20331,3 KIM,21,152556,1 FND,33,1417942,5 XRAY,35,745567,0 KEP,3,22067,-1 Average,20.9,606384,-0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.9 hedge funds with bullish positions and the average amount invested in these stocks was $606 million. That figure was $516 million in DISCA's case. DENTSPLY SIRONA Inc. (NASDAQ:XRAY) is the most popular stock in this table. On the other hand Korea Electric Power Corporation (NYSE:KEP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Discovery Inc. (NASDAQ:DISCA) is more popular among hedge funds. Our overall hedge fund sentiment score for DISCA is 79.3. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately DISCA wasn't nearly as popular as these 5 stocks and hedge funds that were betting on DISCA were disappointed as the stock returned -8.3% since the end of the third quarter (through 11/30) 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 most of these stocks already outperformed the market since 2019.

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