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Ascent Capital Group Inc (ASCMA): Solid Investment or Sugary Speculation?

Value investor Mario Gabelli had a $35.8 million position in the shares of Ascent Capital Group Inc (NASDAQ:ASCMA) through GAMCO Investors according to his firm’s latest filings. Gabelli’s position was an increase of 2% over his previous one through GAMCO, and Gabelli was joined by several other funds upping their positions in ASCMA in their latest filings. Some of those funds include Wallace Capital, Renaissance Technologies, and Millennium Management. Wallace increased its stake by 13% to 371,642 shares with a value close to $15 million. Renaissance grew its position by 50% to 319,200 shares, and Millennium did the same but to an even greater extent – by 349% to 159,949 shares.

Ascent Capital Group Inc (NASDAQ:ASCMA)

These investments are interesting as it has been shown that tracking hedge funds can help an everyday investor. Through our research we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. The most popular large-cap picks of hedge funds, however, underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith in large-cap stocks. Ascent Capital is a small-cap stock that is popular with the aforementioned funds, despite a market capitalization of only $551 million. In forward tests since August 2012 the top 15 small-cap stocks of funds tracked by Insider Monkey beat the market by an impressive 84 percentage points, returning over 142% (read the details here). Hence a retail investor needs to isolate himself from the herd and take advantage of the best growth opportunities in the market by concentrating on small-cap stocks.

In addition to the funds mentioned above, Okumus Fund Management and Chou Associates built new stakes in the shares of Ascent Capital Group Inc (NASDAQ:ASCMA). Okumus intiated a 157,163 share position with a value of $6.3 million, and Chou built a 140,000 share stake worth a little over $5.5 million. Rounding out the top ten holders in the securities of Ascent Capital among hedge funds are Wallace R. Weitz & Co., which maintained its 140,000-share holding, while Courage Capital and Eagle Capital slightly decreased their holdings – by 8% to 132,961 shares and 1% to 80,535 shares, respectively. All in all, hedge funds were largely bullish on Ascent Capital as of their latest 13F filings; however, it is worth mentioning that a few hedge funds exited their positions. Joel Greenblatt of Gotham Asset Management eliminated his position, and Weatherbie Capital, Bares Capital, and 12 West Capital followed Gotham in doing the same.

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