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This Metric Says You Are Smart to Sell Liberty Media Corp (LMCA)

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Is Liberty Media Corp (NASDAQ:LMCA) a healthy stock for your portfolio? Hedge funds are getting less optimistic. The number of bullish hedge fund positions fell by 16 recently.

If you’d ask most investors, hedge funds are viewed as unimportant, outdated investment vehicles of years past. While there are over 8000 funds in operation at the moment, we at Insider Monkey hone in on the elite of this group, about 450 funds. It is widely believed that this group oversees most of the smart money’s total capital, and by tracking their highest performing stock picks, we have unsheathed a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Liberty Media CorpEqually as beneficial, optimistic insider trading sentiment is a second way to break down the marketplace. Obviously, there are lots of reasons for an insider to drop shares of his or her company, but just one, very clear reason why they would behave bullishly. Various empirical studies have demonstrated the impressive potential of this method if piggybackers know where to look (learn more here).

With these “truths” under our belt, we’re going to take a peek at the recent action regarding Liberty Media Corp (NASDAQ:LMCA).

How are hedge funds trading Liberty Media Corp (NASDAQ:LMCA)?

At the end of the first quarter, a total of 43 of the hedge funds we track were long in this stock, a change of -27% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably.

When looking at the hedgies we track, Berkshire Hathaway, managed by Warren Buffett, holds the biggest position in Liberty Media Corp (NASDAQ:LMCA). Berkshire Hathaway has a $627.6 million position in the stock, comprising 0.7% of its 13F portfolio. Coming in second is Chase Coleman and Feroz Dewan of Tiger Global Management LLC, with a $611.2 million position; 9.5% of its 13F portfolio is allocated to the company. Remaining peers that are bullish include Daniel S. Och’s OZ Management, Kenneth Mario Garschina’s Mason Capital Management and Michael Lowenstein’s Kensico Capital.

Since Liberty Media Corp (NASDAQ:LMCA) has witnessed bearish sentiment from hedge fund managers, we can see that there were a few funds who were dropping their entire stakes last quarter. Intriguingly, Warren Buffett’s Berkshire Hathaway dumped the largest stake of the “upper crust” of funds we monitor, valued at close to $652.2 million in stock., and Chase Coleman and Feroz Dewan of Tiger Global Management LLC was right behind this move, as the fund dropped about $385.7 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 16 funds last quarter.

Insider trading activity in Liberty Media Corp (NASDAQ:LMCA)

Insider buying is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the last half-year time frame, Liberty Media Corp (NASDAQ:LMCA) has experienced 1 unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Liberty Media Corp (NASDAQ:LMCA). These stocks are CTC Media, Inc. (NASDAQ:CTCM), CBS Corporation (NYSE:CBS), Scripps Networks Interactive, Inc. (NYSE:SNI), and Grupo Televisa SAB (ADR) (NYSE:TV). This group of stocks belong to the broadcasting – tv industry and their market caps are similar to LMCA’s market cap.

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