Here’s What Hedge Funds Think About Graham Holdings Co (GHC)

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ recent losses in Facebook. Let’s take a closer look at what the funds we track think about Graham Holdings Co (NYSE:GHC) in this article.

Is Graham Holdings Co (NYSE:GHC) ready to rally soon? The best stock pickers are turning bullish. The number of long hedge fund positions inched up by 2 in recent months. Our calculations also showed that ghc isn’t among the 30 most popular stocks among hedge funds. GHC was in 19 hedge funds’ portfolios at the end of December. There were 17 hedge funds in our database with GHC positions at the end of the previous quarter.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Mario Gabelli

We’re going to analyze the key hedge fund action surrounding Graham Holdings Co (NYSE:GHC).

Hedge fund activity in Graham Holdings Co (NYSE:GHC)

At Q4’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in GHC a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

No of Hedge Funds With GHC Positions

When looking at the institutional investors followed by Insider Monkey, Mason Hawkins’s Southeastern Asset Management has the largest position in Graham Holdings Co (NYSE:GHC), worth close to $416.4 million, accounting for 5.9% of its total 13F portfolio. Sitting at the No. 2 spot is Wallace Capital Management, managed by Scott Wallace, which holds a $78.9 million position; 11.5% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism comprise Cliff Asness’s AQR Capital Management, Jim Simons’s Renaissance Technologies and Mario Gabelli’s GAMCO Investors.

As one would reasonably expect, key hedge funds have jumped into Graham Holdings Co (NYSE:GHC) headfirst. Weld Capital Management, managed by Minhua Zhang, established the most outsized position in Graham Holdings Co (NYSE:GHC). Weld Capital Management had $0.6 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $0.3 million position during the quarter. The following funds were also among the new GHC investors: Benjamin A. Smith’s Laurion Capital Management and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Graham Holdings Co (NYSE:GHC) but similarly valued. We will take a look at Performance Food Group Company (NYSE:PFGC), argenx SE (NASDAQ:ARGX), Zynga Inc (NASDAQ:ZNGA), and EnerSys (NYSE:ENS). All of these stocks’ market caps are similar to GHC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PFGC 18 159221 -5
ARGX 27 709744 -7
ZNGA 29 725450 3
ENS 22 132184 4
Average 24 431650 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $432 million. That figure was $615 million in GHC’s case. Zynga Inc (NASDAQ:ZNGA) is the most popular stock in this table. On the other hand Performance Food Group Company (NYSE:PFGC) is the least popular one with only 18 bullish hedge fund positions. Graham Holdings Co (NYSE:GHC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately GHC wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); GHC investors were disappointed as the stock returned 9.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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