Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards The New York Times Company (NYSE:NYT).
The New York Times Company (NYSE:NYT) has seen a decrease in enthusiasm from smart money lately. The New York Times Company (NYSE:NYT) was in 45 hedge funds’ portfolios at the end of September. The all time high for this statistic is 50. Our calculations also showed that NYT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Daniel Sundheim of D1 Capital
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. Now let’s take a peek at the key hedge fund action regarding The New York Times Company (NYSE:NYT).
Do Hedge Funds Think NYT Is A Good Stock To Buy Now?
At third quarter’s end, a total of 45 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the previous quarter. By comparison, 45 hedge funds held shares or bullish call options in NYT a year ago. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in The New York Times Company (NYSE:NYT) was held by Darsana Capital Partners, which reported holding $418.8 million worth of stock at the end of September. It was followed by Farallon Capital with a $400.9 million position. Other investors bullish on the company included Sculptor Capital, Stockbridge Partners, and D1 Capital Partners. In terms of the portfolio weights assigned to each position Anabranch Capital allocated the biggest weight to The New York Times Company (NYSE:NYT), around 21.5% of its 13F portfolio. Darsana Capital Partners is also relatively very bullish on the stock, earmarking 13.8 percent of its 13F equity portfolio to NYT.
Since The New York Times Company (NYSE:NYT) has experienced a decline in interest from the smart money, it’s easy to see that there were a few money managers who were dropping their full holdings by the end of the third quarter. Interestingly, Gil Simon’s SoMa Equity Partners dumped the largest position of the “upper crust” of funds tracked by Insider Monkey, worth close to $117.6 million in stock, and Michael Rockefeller and KarláKroeker’s Woodline Partners was right behind this move, as the fund said goodbye to about $4 million worth. These moves are important to note, as aggregate hedge fund interest fell by 3 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as The New York Times Company (NYSE:NYT) but similarly valued. These stocks are Huaneng Power International Inc (NYSE:HNP), Vistra Corp. (NYSE:VST), Berry Global Group Inc (NYSE:BERY), Aspen Technology, Inc. (NASDAQ:AZPN), Zynga Inc (NASDAQ:ZNGA), The Western Union Company (NYSE:WU), and Sealed Air Corporation (NYSE:SEE). This group of stocks’ market valuations are similar to NYT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HNP | 4 | 5801 | 0 |
| VST | 38 | 1221296 | 6 |
| BERY | 39 | 1245908 | 2 |
| AZPN | 20 | 620030 | -3 |
| ZNGA | 52 | 603900 | 3 |
| WU | 27 | 234768 | -4 |
| SEE | 33 | 626876 | 5 |
| Average | 30.4 | 651226 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.4 hedge funds with bullish positions and the average amount invested in these stocks was $651 million. That figure was $2431 million in NYT’s case. Zynga Inc (NASDAQ:ZNGA) is the most popular stock in this table. On the other hand Huaneng Power International Inc (NYSE:HNP) is the least popular one with only 4 bullish hedge fund positions. The New York Times Company (NYSE:NYT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NYT is 71.7. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately NYT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NYT were disappointed as the stock returned -3.5% since the end of September (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 many of these stocks already outperformed the market since 2019.
Follow New York Times Co (NYSE:NYT)
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Disclosure: None. This article was originally published at Insider Monkey.
