Nexstar Broadcasting Group, Inc. (NASDAQ:NXST) investors should pay attention to an increase in activity from the world's largest hedge funds recently.
According to most investors, hedge funds are seen as underperforming, outdated financial vehicles of yesteryear. While there are greater than 8000 funds in operation at the moment, we look at the top tier of this group, close to 450 funds. It is widely believed that this group has its hands on most of the hedge fund industry's total asset base, and by paying attention to their best picks, we have formulated a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Equally as important, bullish insider trading activity is a second way to break down the financial markets. Obviously, there are many reasons for an insider to downsize shares of his or her company, but only one, very simple reason why they would buy. Various empirical studies have demonstrated the useful potential of this strategy if you know what to do (learn more here).
With all of this in mind, let's take a look at the recent action regarding Nexstar Broadcasting Group, Inc. (NASDAQ:NXST).
In preparation for this quarter, a total of 21 of the hedge funds we track were bullish in this stock, a change of 50% from one quarter earlier. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were increasing their holdings considerably.
According to our comprehensive database, Edward A. Mule's Silver Point Capital had the most valuable position in Nexstar Broadcasting Group, Inc. (NASDAQ:NXST), worth close to $27.6 million, accounting for 2.6% of its total 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $22.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include Alexander Mitchell's Scopus Asset Management, Dennis Leibowitz's Act II Capital and Thomas Ellis and Todd Hammer's North Run Capital.
Now, key money managers were leading the bulls' herd. Scopus Asset Management, managed by Alexander Mitchell, assembled the most valuable position in Nexstar Broadcasting Group, Inc. (NASDAQ:NXST). Scopus Asset Management had 12.4 million invested in the company at the end of the quarter. Dennis Leibowitz's Act II Capital also initiated a $11 million position during the quarter. The other funds with brand new NXST positions are Mark Kingdon's Kingdon Capital, Ken Griffin's Citadel Investment Group, and D. E. Shaw's D E Shaw.
Insider trading activity, especially when it's bullish, is at its handiest when the company we're looking at has seen transactions within the past half-year. Over the latest six-month time period, Nexstar Broadcasting Group, Inc. (NASDAQ:NXST) has seen 1 unique insiders buying, and 9 insider sales (see the details of insider trades here).
Let's check out hedge fund and insider activity in other stocks similar to Nexstar Broadcasting Group, Inc. (NASDAQ:NXST). These stocks are Entravision Communication (NYSE:EVC), Belo Corp. (NYSE:BLC), Central European Media Enterprises Ltd. (NASDAQ:CETV), Fisher Communications, Inc. (NASDAQ:FSCI), and LIN TV Corp (NYSE:TVL). This group of stocks are the members of the broadcasting - tv industry and their market caps resemble NXST's market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Entravision Communication (NYSE:EVC)||7||0||5|
|Belo Corp. (NYSE:BLC)||16||0||4|
|Central European Media Enterprises Ltd. (NASDAQ:CETV)||9||0||0|
|Fisher Communications, Inc. (NASDAQ:FSCI)||8||4||2|
|LIN TV Corp (NYSE:TVL)||11||0||6|
With the returns demonstrated by the aforementioned research, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and Nexstar Broadcasting Group, Inc. (NASDAQ:NXST) shareholders fit into this picture quite nicely.