Sinclair Broadcast Group, Inc. (SBGI): Are Hedge Funds Right About This Stock?

The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards Sinclair Broadcast Group, Inc. (NASDAQ:SBGI), and what that likely means for the prospects of the company and its stock.

Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) was in 31 hedge funds’ portfolios at the end of the third quarter of 2015. Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) has experienced a decrease in support from the world’s most elite money managers recently. There were 32 hedge funds in our database with Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) holdings at the end of the previous quarter. At the end of this article, we will also compare Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) to other stocks, including Tech Data Corp (NASDAQ:TECD), AMAYA INC (NASDAQ:AYA), and Healthcare Services Group, Inc. (NASDAQ:HCSG) to get a better sense of its popularity.

To the average investor, there are a large number of formulas stock traders put to use to evaluate their holdings. Two of the most innovative formulas are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best money managers can outperform the S&P 500 by a solid amount (see the details here).

Keeping this in mind, let’s take a look at the key action regarding Sinclair Broadcast Group, Inc. (NASDAQ:SBGI).

How have hedgies been trading Sinclair Broadcast Group, Inc. (NASDAQ:SBGI)?

Heading into Q4, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 3% from the second quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Roystone Capital Partners, managed by Richard Barrera, holds the most valuable position in Sinclair Broadcast Group, Inc. (NASDAQ:SBGI). Roystone Capital Partners has a $107.8 million position in the stock, comprising 5.1% of its 13F portfolio. The second largest stake is held by Glenhill Advisors, managed by Glenn J. Krevlin, which holds a $98.9 million position; the fund has 7.8% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions consist of Thomas E. Claugus’s GMT Capital, Jay Petschek and Steven Major’s Corsair Capital Management, and Matthew Knauer and Mina Faltas’s Nokota Management.

Because Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) has experienced a declining sentiment from the smart money, it’s easy to see that there were a few money managers that decided to sell off their entire stakes heading into Q4. At the top of the heap, Larry Robbins’s Glenview Capital said goodbye to the biggest position of the 700 funds watched by Insider Monkey, comprising close to $68 million in stock. John Lykouretzos’s fund, Hoplite Capital Management, also dumped its stock, about $53.6 million worth of shares. These moves are interesting, as total hedge fund interest was cut by 1 fund heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) but similarly valued. We will take a look at Tech Data Corp (NASDAQ:TECD), AMAYA INC (NASDAQ:AYA), Healthcare Services Group, Inc. (NASDAQ:HCSG), and Energizer Holdings, Inc. (NYSE:ENR). This group of stocks’ market valuations resembles Sinclair Broadcast Group, Inc. (NASDAQ:SBGI)’s market valuation.

As you can see, these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $304 million. That figure was $529 million in Sinclair Broadcast Group, Inc. (NASDAQ:SBGI)’s case. Tech Data Corp (NASDAQ:TECD) is the most popular stock in this table. On the other hand, Healthcare Services Group, Inc. (NASDAQ:HCSG) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks, Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.