Do Hedge Funds Love Graham Holdings Co (GHC)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Graham Holdings Co (NYSE:GHC) in this article.

Hedge fund interest in Graham Holdings Co (NYSE:GHC) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that GHC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare GHC to other stocks including Hello Group Inc. (NASDAQ:MOMO), Evertec Inc (NYSE:EVTC), and SelectQuote, Inc. (NYSE:SLQT) to get a better sense of its popularity.

In the 21st century investor’s toolkit there are a large number of metrics market participants put to use to value their stock investments. Two of the less known metrics are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the elite investment managers can beat the broader indices by a healthy amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Mason Hawkins of Southeastern Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. You can subscribe to our free daily newsletter on our homepage. Now we’re going to analyze the fresh hedge fund action regarding Graham Holdings Co (NYSE:GHC).

Do Hedge Funds Think GHC Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in GHC over the last 24 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

The largest stake in Graham Holdings Co (NYSE:GHC) was held by Southeastern Asset Management, which reported holding $138.5 million worth of stock at the end of June. It was followed by Wallace Capital Management with a $109 million position. Other investors bullish on the company included Madison Avenue Partners, AQR Capital Management, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Madison Avenue Partners allocated the biggest weight to Graham Holdings Co (NYSE:GHC), around 24.24% of its 13F portfolio. Wallace Capital Management is also relatively very bullish on the stock, earmarking 14.29 percent of its 13F equity portfolio to GHC.

Judging by the fact that Graham Holdings Co (NYSE:GHC) has witnessed declining sentiment from the smart money, it’s easy to see that there lies a certain “tier” of money managers that decided to sell off their full holdings in the second quarter. Interestingly, Israel Englander’s Millennium Management said goodbye to the biggest position of the 750 funds monitored by Insider Monkey, comprising an estimated $13.7 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund sold off about $1.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Graham Holdings Co (NYSE:GHC) but similarly valued. We will take a look at Hello Group Inc. (NASDAQ:MOMO), Evertec Inc (NYSE:EVTC), SelectQuote, Inc. (NYSE:SLQT), Corporate Office Properties Trust (NYSE:OFC), Worthington Industries, Inc. (NYSE:WOR), FirstCash, Inc. (NASDAQ:FCFS), and Cathay General Bancorp (NASDAQ:CATY). This group of stocks’ market values are closest to GHC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MOMO 24 305589 -1
EVTC 20 229559 -1
SLQT 19 140453 2
OFC 13 79567 -6
WOR 15 52633 1
FCFS 17 118556 4
CATY 13 110863 1
Average 17.3 148174 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.3 hedge funds with bullish positions and the average amount invested in these stocks was $148 million. That figure was $468 million in GHC’s case. Hello Group Inc. (NASDAQ:MOMO) is the most popular stock in this table. On the other hand Corporate Office Properties Trust (NYSE:OFC) is the least popular one with only 13 bullish hedge fund positions. Graham Holdings Co (NYSE:GHC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GHC is 75.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately GHC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GHC were disappointed as the stock returned -8.4% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Follow Graham Holdings Co (NYSE:GHC)

Suggested Articles:

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