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Here is How Hedge Funds Traded MSG Networks Inc (MSGN) During The Crash

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded MSG Networks Inc (NYSE:MSGN) based on those filings.

MSG Networks Inc (NYSE:MSGN) investors should be aware of a decrease in hedge fund sentiment of late. MSGN was in 24 hedge funds’ portfolios at the end of the first quarter of 2020. There were 28 hedge funds in our database with MSGN positions at the end of the previous quarter. Our calculations also showed that MSGN 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).

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.

Mario Gabelli of GAMCO Investors

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 one. We 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. With all of this in mind we’re going to take a look at the new hedge fund action regarding MSG Networks Inc (NYSE:MSGN).

How are hedge funds trading MSG Networks Inc (NYSE:MSGN)?

Heading into the second quarter of 2020, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MSGN over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is MSGN A Good Stock To Buy?

More specifically, Ariel Investments was the largest shareholder of MSG Networks Inc (NYSE:MSGN), with a stake worth $94.4 million reported as of the end of September. Trailing Ariel Investments was Contrarius Investment Management, which amassed a stake valued at $35.5 million. GAMCO Investors, Arrowstreet Capital, and Solas Capital Management 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 Contrarius Investment Management allocated the biggest weight to MSG Networks Inc (NYSE:MSGN), around 4.55% of its 13F portfolio. Solas Capital Management is also relatively very bullish on the stock, dishing out 4.47 percent of its 13F equity portfolio to MSGN.

Because MSG Networks Inc (NYSE:MSGN) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedge funds that slashed their full holdings heading into Q4. Interestingly, Donald Sussman’s Paloma Partners sold off the largest stake of all the hedgies followed by Insider Monkey, comprising an estimated $1.6 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund cut about $1.2 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 4 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to MSG Networks Inc (NYSE:MSGN). We will take a look at FB Financial Corporation (NYSE:FBK), The E.W. Scripps Company (NYSE:SSP), Standex International Corp. (NYSE:SXI), and Molecular Templates, Inc. (NASDAQ:MTEM). This group of stocks’ market values are closest to MSGN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FBK 11 37526 6
SSP 12 74208 0
SXI 9 20088 -3
MTEM 17 142757 -3
Average 12.25 68645 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $179 million in MSGN’s case. Molecular Templates, Inc. (NASDAQ:MTEM) is the most popular stock in this table. On the other hand Standex International Corp. (NYSE:SXI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks MSG Networks Inc (NYSE:MSGN) 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. Unfortunately MSGN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on MSGN were disappointed as the stock returned 21.8% during the second quarter (through June 10th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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