AirMedia Group Inc (AMCN) Surges On Proposed Purchase: Is It A Buy Now?

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How are hedge funds trading AirMedia Group Inc (ADR) (NASDAQ:AMCN)?

Hedge funds are completely negative on the stock. All four hedge funds that held positions in the stock at the end of Q4 opted to say good bye to those positions by the end of Q1.

According to Insider Monkey’s database, Hillhouse Capital Management led by Lei Zhang held the largest position in the stock at the end of 2014, with 150,460 shares worth $385,000 at that time. The second-largest position in the stock was held by Jim Simons‘ Renaissance Technologies, which had 69,128 shares valued at $177,000 at the end of Q4. Ken Griffin‘s Citadel Investment Group and Israel Englander‘s Millennium Management also had small positions in the stock at the end of the fourth quarter. But in the first quarter, all four hedge funds closed their positions.

Hedge fund activity indicates that the company isn’t in great shape or a wise investment, apart from the latest offer. But given that the stock is now under a special circumstance, we can only evaluate its current worth based on the likelihood of the purchase being accepted by the board and the company being taken private, which would provide a remaining upside potential of over 26% if so. However, shareholders would be at risk of big losses in the event the purchase is not consummated. While the offer at a 70% premium seems fair, the fact that the offer is beneath the price the stock had traded at throughout much of the last month raises doubts as to just how valuable an offer it really is, and whether it’s in the best interests of shareholders. As such, we would advise steering clear of this deal.

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