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Hedge Funds Done Buying iHeartMedia, Inc. (IHRT)?

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 (Recession is Imminent: We Need A Travel Ban NOW). 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 iHeartMedia, Inc. (NASDAQ:IHRT).

Is iHeartMedia, Inc. (NASDAQ:IHRT) worth your attention right now? Prominent investors are becoming less hopeful. The number of long hedge fund bets were cut by 3 lately. Our calculations also showed that IHRT 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). IHRT was in 28 hedge funds’ portfolios at the end of March. There were 31 hedge funds in our database with IHRT positions at the end of the previous quarter.

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

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this oneWe interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the latest hedge fund action surrounding iHeartMedia, Inc. (NASDAQ:IHRT).

What does smart money think about iHeartMedia, Inc. (NASDAQ:IHRT)?

At Q1’s end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in IHRT 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.

The largest stake in iHeartMedia, Inc. (NASDAQ:IHRT) was held by Brigade Capital, which reported holding $20.5 million worth of stock at the end of September. It was followed by OZ Management with a $19.9 million position. Other investors bullish on the company included Contrarian Capital, Mason Capital Management, and Engle Capital. In terms of the portfolio weights assigned to each position Contrarian Capital allocated the biggest weight to iHeartMedia, Inc. (NASDAQ:IHRT), around 7.78% of its 13F portfolio. Lonestar Capital Management is also relatively very bullish on the stock, setting aside 5.16 percent of its 13F equity portfolio to IHRT.

Because iHeartMedia, Inc. (NASDAQ:IHRT) has faced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of money managers that elected to cut their entire stakes last quarter. It’s worth mentioning that James Dondero’s Highland Capital Management dropped the largest stake of the “upper crust” of funds tracked by Insider Monkey, worth close to $1.9 million in stock. Donald Sussman’s fund, Paloma Partners, also said goodbye to its stock, about $1.7 million worth. These moves are interesting, as total hedge fund interest fell by 3 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as iHeartMedia, Inc. (NASDAQ:IHRT) but similarly valued. These stocks are SP Plus Corp (NASDAQ:SP), Camden National Corporation (NASDAQ:CAC), Mercer International Inc. (NASDAQ:MERC), and Origin Bancorp, Inc. (NASDAQ:OBNK). This group of stocks’ market values are similar to IHRT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SP 11 65053 -2
CAC 10 43580 -3
MERC 10 84956 -4
OBNK 5 10774 -3
Average 9 51091 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $107 million in IHRT’s case. SP Plus Corp (NASDAQ:SP) is the most popular stock in this table. On the other hand Origin Bancorp, Inc. (NASDAQ:OBNK) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks iHeartMedia, Inc. (NASDAQ:IHRT) is more popular among hedge funds. 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 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on IHRT, though not to the same extent, as the stock returned 19% in Q2 (through the end of May) and outperformed the market as well.

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