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Did Hedge Funds Make The Right Call On Tegna Inc (TGNA) ?

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Tegna Inc (NYSE:TGNA) at the end of the first quarter and determine whether the smart money was really smart about this stock.

Tegna Inc (NYSE:TGNA) was in 29 hedge funds’ portfolios at the end of March. TGNA investors should be aware of an increase in enthusiasm from smart money of late. There were 19 hedge funds in our database with TGNA holdings at the end of the previous quarter. Our calculations also showed that TGNA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

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

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

GOTHAM ASSET MANAGEMENT

Joel Greenblatt of Gotham Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. Now let’s take a look at the latest hedge fund action surrounding Tegna Inc (NYSE:TGNA).

How are hedge funds trading Tegna Inc (NYSE:TGNA)?

At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 53% from the fourth quarter of 2019. On the other hand, there were a total of 26 hedge funds with a bullish position in TGNA a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is TGNA A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Parag Vora’s HG Vora Capital Management has the most valuable position in Tegna Inc (NYSE:TGNA), worth close to $162.9 million, comprising 15.9% of its total 13F portfolio. Coming in second is Ariel Investments, led by John W. Rogers, holding a $54.2 million position; 1% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions encompass Cliff Asness’s AQR Capital Management, Carl Tiedemann and Michael Tiedemann’s TIG Advisors and Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors. In terms of the portfolio weights assigned to each position HG Vora Capital Management allocated the biggest weight to Tegna Inc (NYSE:TGNA), around 15.88% of its 13F portfolio. Litespeed Management is also relatively very bullish on the stock, dishing out 5.94 percent of its 13F equity portfolio to TGNA.

With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. TIG Advisors, managed by Carl Tiedemann and Michael Tiedemann, assembled the most valuable position in Tegna Inc (NYSE:TGNA). TIG Advisors had $27.9 million invested in the company at the end of the quarter. Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors also initiated a $23.5 million position during the quarter. The other funds with brand new TGNA positions are Ken Griffin’s Citadel Investment Group, Sander Gerber’s Hudson Bay Capital Management, and Joseph Samuels’s Islet Management.

Let’s now review hedge fund activity in other stocks similar to Tegna Inc (NYSE:TGNA). We will take a look at Parsley Energy Inc (NYSE:PE), FireEye Inc (NASDAQ:FEYE), BRF SA (NYSE:BRFS), and John Bean Technologies Corporation (NYSE:JBT). This group of stocks’ market values are similar to TGNA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PE 45 437697 -7
FEYE 32 159577 2
BRFS 14 34760 0
JBT 12 69622 -4
Average 25.75 175414 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $175 million. That figure was $377 million in TGNA’s case. Parsley Energy Inc (NYSE:PE) is the most popular stock in this table. On the other hand John Bean Technologies Corporation (NYSE:JBT) 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. This is a slightly positive signal but 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 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately TGNA wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on TGNA were disappointed as the stock returned 3.2% during the same time period 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 many of these stocks already outperformed the market so far this year.

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