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Did Hedge Funds Make The Right Call On Grupo Televisa SAB (TV) ?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtGrupo Televisa SAB (NYSE:TV) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Hedge fund interest in Grupo Televisa SAB (NYSE:TV) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare TV to other stocks including Mirati Therapeutics, Inc. (NASDAQ:MRTX), Cabot Microelectronics Corporation (NASDAQ:CCMP), and The Wendy’s Company (NASDAQ:WEN) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now we’re going to take a look at the new hedge fund action encompassing Grupo Televisa SAB (NYSE:TV).

What does smart money think about Grupo Televisa SAB (NYSE:TV)?

Heading into the second quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 16 hedge funds held shares or bullish call options in TV a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, FPR Partners, managed by Bob Peck and Andy Raab, holds the biggest position in Grupo Televisa SAB (NYSE:TV). FPR Partners has a $185.1 million position in the stock, comprising 7.6% of its 13F portfolio. The second most bullish fund manager is Michael Larson of Bill & Melinda Gates Foundation Trust, with a $97.9 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism contain Renaissance Technologies, Richard Merage’s MIG Capital and Barry Dargan’s Intermede Investment Partners. In terms of the portfolio weights assigned to each position FPR Partners allocated the biggest weight to Grupo Televisa SAB (NYSE:TV), around 7.61% of its 13F portfolio. Steel Canyon Capital is also relatively very bullish on the stock, setting aside 6.2 percent of its 13F equity portfolio to TV.

Because Grupo Televisa SAB (NYSE:TV) has experienced bearish sentiment from hedge fund managers, it’s easy to see that there were a few hedgies that elected to cut their entire stakes heading into Q4. It’s worth mentioning that Ken Griffin’s Citadel Investment Group sold off the biggest stake of all the hedgies followed by Insider Monkey, worth about $2.3 million in stock. Minhua Zhang’s fund, Weld Capital Management, also dropped its stock, about $0.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Grupo Televisa SAB (NYSE:TV) but similarly valued. These stocks are Mirati Therapeutics, Inc. (NASDAQ:MRTX), Cabot Microelectronics Corporation (NASDAQ:CCMP), The Wendy’s Company (NASDAQ:WEN), and DXC Technology Company (NYSE:DXC). This group of stocks’ market caps match TV’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MRTX 33 1122981 1
CCMP 16 232320 -8
WEN 35 706422 7
DXC 41 382695 -6
Average 31.25 611105 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.25 hedge funds with bullish positions and the average amount invested in these stocks was $611 million. That figure was $482 million in TV’s case. DXC Technology Company (NYSE:DXC) is the most popular stock in this table. On the other hand Cabot Microelectronics Corporation (NASDAQ:CCMP) is the least popular one with only 16 bullish hedge fund positions. Grupo Televisa SAB (NYSE:TV) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 18.6% in 2020 through July 27th and surpassed the market by 17.1 percentage points. Unfortunately TV wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); TV investors were disappointed as the stock returned -4.7% since Q1 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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