At Insider Monkey, we track over 800 hedge funds and pay attention to every move they make, whether as a singular entity or collectively as a group. This enables us to get regular insights on which stocks and sector are becoming popular among hedge funds and which are falling out of favor. One such interesting insight that we gained recently after looking at the recent 13F filing of the hedge funds we track was that a lot of them reduced their exposure to the entertainment sector during the first quarter. In this post, we are going to take a look at the top five entertainment stocks on which funds covered by us became bearish collectively during that period and will try to uncover the reasons behind their bearishness.
Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).
#5 Viacom, Inc. (NASDAQ:VIAB)
– Investors with long positions (as of March 31) : 42
– Aggregate value of investors’ holdings (as of March 31): $1.12 billion
Let’s start with Viacom, Inc. (NASDAQ:VIAB), which saw its ownership among funds covered by us dropping by six and the aggregate value of their holdings in it decreasing by $163 million during the first quarter. Funds that reduced their stake in Viacom, Inc. (NASDAQ:VIAB) during that period included billionaire Donald Yacktman‘s Yacktman Asset Management, which brought its holding down by 14% to 4.44 million shares. Despite the major trouble brewing within the company shares of Viacom have inched up by over 2%. On May 29, billionaire Sumner Redstone, who is the majority owner of Viacom through the stake that he and his family owns in National Amusements, ousted Viacom’s CEO Philippe Dauman and director George Abrams from the Board of National Amusements and as trustees of his family trust. According to reports, Mr. Redstone is also planning to remove the entire Board of Viacom and Mr. Dauman as the CEO of the company.
#4 CBS Corporation (NYSE:CBS)
– Investors with long positions (as of March 31) : 61
– Aggregate value of investors’ holdings (as of March 31): $2.92 billion
CBS Corporation (NYSE:CBS) is another media company controlled by Mr. Redstone. However, so far there has been no signs that the nonagenarian businessman is looking to push any major changes in CBS Corporation (NYSE:CBS). During the first quarter, hedge funds covered by us long CBS Corporation declined by three and the aggregate value of their holdings in it shrunk by 13.4%. Though shares of CBS Corporation have appreciated by 12% so far this year, most analysts feel that they are still relatively cheap and can see a further appreciation of over 25% from the current levels. On May 3, the company reported its fourth quarter numbers, declaring EPS of $1.02 on revenue of $3.85 billion versus analysts’ expectations of EPS of $0.94 on revenue of $3.50 billion. John Shapiro‘s Chieftain Capital upped its stake in CBS Corporation by 1% to 6.94 million shares during the first quarter.