Hedge Funds Are Betting On Nexstar Media Group, Inc. (NXST)

In this article we are going to use hedge fund sentiment as a tool and determine whether Nexstar Media Group, Inc. (NASDAQ:NXST) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Is Nexstar Media Group, Inc. (NASDAQ:NXST) ready to rally soon? The best stock pickers were in an optimistic mood. The number of bullish hedge fund bets moved up by 4 lately. Nexstar Media Group, Inc. (NASDAQ:NXST) was in 38 hedge funds’ portfolios at the end of September. The all time high for this statistic is 50. Our calculations also showed that NXST isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 34 hedge funds in our database with NXST positions at the end of the second quarter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind let’s take a gander at the recent hedge fund action encompassing Nexstar Media Group, Inc. (NASDAQ:NXST).

Daniel Gold QVT Financial

Daniel Gold of QVT Financial

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

At Q3’s end, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NXST over the last 25 quarters. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Baupost Group, managed by Seth Klarman, holds the most valuable position in Nexstar Media Group, Inc. (NASDAQ:NXST). Baupost Group has a $310.9 million position in the stock, comprising 2.9% of its 13F portfolio. On Baupost Group’s heels is Cardinal Capital, managed by Amy Minella, which holds a $166.4 million position; the fund has 4% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish comprise Peter S. Park’s Park West Asset Management, Claus Moller’s P2 Capital Partners and Daniel Gold’s QVT Financial. In terms of the portfolio weights assigned to each position Billings Capital Management allocated the biggest weight to Nexstar Media Group, Inc. (NASDAQ:NXST), around 11.31% of its 13F portfolio. Brightline Capital is also relatively very bullish on the stock, designating 8.7 percent of its 13F equity portfolio to NXST.

As aggregate interest increased, specific money managers were breaking ground themselves. Chiron Investment Management, managed by Ryan Caldwell, established the largest position in Nexstar Media Group, Inc. (NASDAQ:NXST). Chiron Investment Management had $18.2 million invested in the company at the end of the quarter. Steven Tananbaum’s GoldenTree Asset Management also made a $16 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Algert’s Algert Global, Greg Eisner’s Engineers Gate Manager, and Nick Thakore’s Diametric Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Nexstar Media Group, Inc. (NASDAQ:NXST) but similarly valued. We will take a look at Texas Roadhouse Inc (NASDAQ:TXRH), Petco Health and Wellness Company, Inc. (NASDAQ:WOOF), Stag Industrial Inc (NYSE:STAG), Inspire Medical Systems, Inc. (NYSE:INSP), CCC Intelligent Solutions Holdings Inc. (NYSE:CCCS), iQIYI, Inc. (NASDAQ:IQ), and Kingsoft Cloud Holdings Limited (NASDAQ:KC). This group of stocks’ market values are closest to NXST’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TXRH 36 993486 -1
WOOF 26 319858 -1
STAG 17 219383 2
INSP 29 478246 -3
CCCS 28 228410 28
IQ 23 476604 -4
KC 12 31613 0
Average 24.4 392514 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $393 million. That figure was $874 million in NXST’s case. Texas Roadhouse Inc (NASDAQ:TXRH) is the most popular stock in this table. On the other hand Kingsoft Cloud Holdings Limited (NASDAQ:KC) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Nexstar Media Group, Inc. (NASDAQ:NXST) is more popular among hedge funds. Our overall hedge fund sentiment score for NXST is 81.8. 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. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately NXST wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NXST were disappointed as the stock returned -1.2% since the end of the third quarter (through 11/30) 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 most of these stocks already outperformed the market since 2019.

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