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Twenty-First Century Fox Inc (FOX) Seeing Drastic Change In Hedge Fund Optimism

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Twenty-First Century Fox Inc (NASDAQ:FOX)? The smart money sentiment can provide an answer to this question.

Twenty-First Century Fox Inc (NASDAQ:FOX) was in 32 hedge funds’ portfolio at the end of the third quarter of 2015. FOX investors should be aware of a decrease in hedge fund interest lately. There were 42 hedge funds in our database with FOX positions at the end of the previous quarter.

If you’d ask most traders, hedge funds are perceived as unimportant, outdated investment tools of yesteryear. While there are greater than 8000 funds with their doors open today, Hedge fund experts at Insider Monkey choose to focus on the top tier of this club, about 700 funds. It is estimated that this group of investors manage the lion’s share of the hedge fund industry’s total asset base, and by keeping an eye on their top equity investments, Insider Monkey has uncovered numerous investment strategies that have historically outrun the broader indices. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by about 12 percentage points annually for 13 years in their back tests.

Keeping this in mind, let’s check out the latest action surrounding Twenty-First Century Fox Inc (NASDAQ:FOX).

What have hedge funds been doing with Twenty-First Century Fox Inc (NASDAQ:FOX)?

At Q3’s end, a total of 32 of the hedge funds tracked by Insider Monkey were bullish in this stock, a change of -24% from the previous quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were considerably optimistic about the stock.

Of the funds tracked by Insider Monkey, Jeffrey Ubben’s ValueAct Capital had the number one position in Twenty-First Century Fox Inc (NASDAQ:FOX), worth close to $1.28 billion, accounting for 7.4% of its total 13F portfolio. On ValueAct Capital’s heels is Yacktman Asset Management, managed by Donald Yacktman, which held a $875.3 million position; the fund has 5.7% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions comprise Boykin Curry’s Eagle Capital Management, Seth Klarman’s Baupost Group and William Duhamel’s Route One Investment Company.

Because Twenty-First Century Fox Inc (NASDAQ:FOX) has faced declining sentiment from hedge fund managers, we can deduct that there were a few fund managers that decided to sell off their full holdings last quarter. At the top of the heap, Kenneth Mario Garschina’s Mason Capital Management cut the biggest position of the “upper crust” of funds monitored by Insider Monkey, valued at an estimated $382.5 million in stock. Michael Hintze’s fund, CQS Cayman LP, also dumped its position, about $72.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 10 funds last quarter.

Let’s also go over hedge fund activity in other stocks similar to Twenty-First Century Fox Inc (NASDAQ:FOX) to have a better idea about the magnitude of hedge fund interest. We will take a look at ING Groep N.V. (ADR) (NYSE:ING), Prudential Public Limited Company (ADR) (NYSE:PUK), Honda Motor Co Ltd (ADR) (NYSE:HMC), and Ford Motor Company (NYSE:F). This group of stocks’ market values resemble FOX’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ING 13 31373 6
PUK 9 134604 0
HMC 10 60915 1
F 38 907228 2

As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks were 284 million dollars. These numbers are small but on the margin they were improving. Overall, we don’t think hedge fund sentiment sends a clear buy signal for FOX but we wouldn’t mind taking a detailed look at the stock only because we think every company ValueAct invests in $1+ billion deserves more investor attention.

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