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Hedge Funds Are Betting On Meredith Corporation (MDP)

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Is Meredith Corporation (NYSE:MDP) a buy, sell, or hold? Money managers are taking a bullish view. The number of long hedge fund positions advanced by 7 in recent months.

According to most market participants, hedge funds are perceived as unimportant, old investment tools of yesteryear. While there are over 8000 funds with their doors open today, we choose to focus on the crème de la crème of this club, around 450 funds. It is widely believed that this group controls the lion’s share of the smart money’s total capital, and by watching their top stock picks, we have brought to light a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as important, optimistic insider trading activity is another way to break down the financial markets. Obviously, there are many stimuli for a corporate insider to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this tactic if shareholders know what to do (learn more here).

Now, let’s take a peek at the recent action surrounding Meredith Corporation (NYSE:MDP).

What does the smart money think about Meredith Corporation (NYSE:MDP)?

Heading into Q2, a total of 19 of the hedge funds we track were long in this stock, a change of 58% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings significantly.

Of the funds we track, Chuck Royce’s Royce & Associates had the biggest position in Meredith Corporation (NYSE:MDP), worth close to $110 million, comprising 0.3% of its total 13F portfolio. Coming in second is Ariel Investments, managed by John W. Rogers, which held a $84.9 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Some other hedge funds that hold long positions include Ken Fisher’s Fisher Asset Management, David Dreman’s Dreman Value Management and Mario Gabelli’s GAMCO Investors.

As industrywide interest jumped, some big names were breaking ground themselves. Scopus Asset Management, managed by Alexander Mitchell, created the most outsized call position in Meredith Corporation (NYSE:MDP). Scopus Asset Management had 5.7 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $4.2 million position during the quarter. The other funds with new positions in the stock are Robert B. Gillam’s McKinley Capital Management, Israel Englander’s Millennium Management, and Phil Frohlich’s Prescott Group Capital Management.

What have insiders been doing with Meredith Corporation (NYSE:MDP)?

Bullish insider trading is particularly usable when the company in question has seen transactions within the past six months. Over the latest six-month time frame, Meredith Corporation (NYSE:MDP) has seen zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Meredith Corporation (NYSE:MDP). These stocks are The Dolan Company (NYSE:DM), Reed Elsevier plc (ADR) (NYSE:RUK), Reed Elsevier NV (ADR) (NYSE:ENL), , and Martha Stewart Living Omnimedia, Inc. (NYSE:MSO). This group of stocks are the members of the publishing – periodicals industry and their market caps resemble MDP’s market cap.

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