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Did Hedge Funds Drop The Ball On Tegna Inc (TGNA) ?

Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.

Tegna Inc (NYSE:TGNA) investors should pay attention to a decrease in hedge fund sentiment in recent months. Our calculations also showed that TGNA isn’t among the 30 most popular stocks among hedge funds.

In the eyes of most shareholders, hedge funds are seen as unimportant, outdated investment vehicles of yesteryear. While there are over 8000 funds with their doors open today, Our researchers choose to focus on the elite of this club, approximately 750 funds. These money managers watch over bulk of the hedge fund industry’s total capital, and by following their unrivaled stock picks, Insider Monkey has found many investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by nearly 5 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

Jeffrey Bronchick - Cove Street Capital

Let’s take a gander at the fresh hedge fund action surrounding Tegna Inc (NYSE:TGNA).

How have hedgies been trading Tegna Inc (NYSE:TGNA)?

Heading into the first quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in TGNA over the last 14 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

TGNA_apr2019

More specifically, Ariel Investments was the largest shareholder of Tegna Inc (NYSE:TGNA), with a stake worth $84.9 million reported as of the end of September. Trailing Ariel Investments was AQR Capital Management, which amassed a stake valued at $75.5 million. Diamond Hill Capital, Cove Street Capital, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.

Due to the fact that Tegna Inc (NYSE:TGNA) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedge funds that slashed their positions entirely by the end of the third quarter. At the top of the heap, Parag Vora’s HG Vora Capital Management dropped the largest investment of the “upper crust” of funds monitored by Insider Monkey, comprising about $35.9 million in stock. John Paulson’s fund, Paulson & Co, also said goodbye to its stock, about $9.3 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to Tegna Inc (NYSE:TGNA). We will take a look at Retail Properties of America Inc (NYSE:RPAI), Meredith Corporation (NYSE:MDP), Genworth Financial Inc (NYSE:GNW), and Boyd Gaming Corporation (NYSE:BYD). All of these stocks’ market caps are similar to TGNA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RPAI 15 175160 1
MDP 12 312287 -5
GNW 22 70350 0
BYD 30 461140 -3
Average 19.75 254734 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $255 million. That figure was $309 million in TGNA’s case. Boyd Gaming Corporation (NYSE:BYD) is the most popular stock in this table. On the other hand Meredith Corporation (NYSE:MDP) is the least popular one with only 12 bullish hedge fund positions. Tegna Inc (NYSE:TGNA) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on TGNA as the stock returned 46% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.

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