Hedge Funds Are Warming Up To iHeartMedia, Inc. (IHRT)

In this article you are going to find out whether hedge funds think iHeartMedia, Inc. (NASDAQ:IHRT) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

iHeartMedia, Inc. (NASDAQ:IHRT) was in 26 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 31. IHRT investors should be aware of an increase in hedge fund interest of late. There were 23 hedge funds in our database with IHRT holdings at the end of December. Our calculations also showed that IHRT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

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David Siegel of Two Sigma Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. Keeping this in mind we’re going to take a look at the recent hedge fund action surrounding iHeartMedia, Inc. (NASDAQ:IHRT).

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

At the end of the first quarter, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the previous quarter. By comparison, 28 hedge funds held shares or bullish call options in IHRT a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Senator Investment Group was the largest shareholder of iHeartMedia, Inc. (NASDAQ:IHRT), with a stake worth $65 million reported as of the end of March. Trailing Senator Investment Group was OZ Management, which amassed a stake valued at $58.4 million. Silver Point Capital, D E Shaw, and Brigade Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Silver Point Capital allocated the biggest weight to iHeartMedia, Inc. (NASDAQ:IHRT), around 5.86% of its 13F portfolio. Contrarian Capital is also relatively very bullish on the stock, setting aside 5.61 percent of its 13F equity portfolio to IHRT.

Consequently, specific money managers have been driving this bullishness. Six Columns Capital, managed by Brad Stephens, initiated the most valuable position in iHeartMedia, Inc. (NASDAQ:IHRT). Six Columns Capital had $13.7 million invested in the company at the end of the quarter. John Bader’s Halcyon Asset Management also made a $10.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Brad Stephens’s Six Columns Capital, John Overdeck and David Siegel’s Two Sigma Advisors, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).

Let’s go over hedge fund activity in other stocks similar to iHeartMedia, Inc. (NASDAQ:IHRT). We will take a look at MaxLinear, Inc. (NYSE:MXL), Livent Corporation (NYSE:LTHM), Big Lots, Inc. (NYSE:BIG), Global Blood Therapeutics Inc (NASDAQ:GBT), Ligand Pharmaceuticals Inc. (NASDAQ:LGND), Murphy Oil Corporation (NYSE:MUR), and First Merchants Corporation (NASDAQ:FRME). This group of stocks’ market caps are similar to IHRT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MXL 19 85386 6
LTHM 22 193265 2
BIG 20 229903 1
GBT 19 594683 -7
LGND 13 61979 -6
MUR 20 139295 2
FRME 11 135533 2
Average 17.7 205721 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $206 million. That figure was $408 million in IHRT’s case. Livent Corporation (NYSE:LTHM) is the most popular stock in this table. On the other hand First Merchants Corporation (NASDAQ:FRME) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks iHeartMedia, Inc. (NASDAQ:IHRT) is more popular among hedge funds. Our overall hedge fund sentiment score for IHRT is 83.2. 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 returned 24% in 2021 through July 9th but still managed to beat the market by 6.7 percentage points. Hedge funds were also right about betting on IHRT as the stock returned 43.7% since the end of March (through 7/9) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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