As we already know from media reports and hedge fund investor letters, many hedge funds lost money in fourth quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with technology among them. Nevertheless, most investors decided to stick to their bullish theses and recouped their losses by the end of the first quarter. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Viacom, Inc. (NASDAQ:VIAB).
Viacom, Inc. (NASDAQ:VIAB) investors should pay attention to an increase in hedge fund sentiment lately. Our calculations also showed that VIAB isn’t among the 30 most popular stocks among hedge funds.
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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to take a peek at the fresh hedge fund action regarding Viacom, Inc. (NASDAQ:VIAB).
How are hedge funds trading Viacom, Inc. (NASDAQ:VIAB)?
At Q1’s end, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VIAB over the last 15 quarters. 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, AQR Capital Management was the largest shareholder of Viacom, Inc. (NASDAQ:VIAB), with a stake worth $294.1 million reported as of the end of March. Trailing AQR Capital Management was Ariel Investments, which amassed a stake valued at $106.9 million. GAMCO Investors, Arrowstreet Capital, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, key money managers have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, created the biggest call position in Viacom, Inc. (NASDAQ:VIAB). Point72 Asset Management had $33.6 million invested in the company at the end of the quarter. George Soros’s Soros Fund Management also initiated a $23.9 million position during the quarter. The other funds with brand new VIAB positions are Phill Gross and Robert Atchinson’s Adage Capital Management, Benjamin A. Smith’s Laurion Capital Management, and Ray Dalio’s Bridgewater Associates.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Viacom, Inc. (NASDAQ:VIAB) but similarly valued. We will take a look at The Gap Inc. (NYSE:GPS), AXA Equitable Holdings, Inc. (NYSE:EQH), Vedanta Ltd (NYSE:VEDL), and AEGON N.V. (NYSE:AEG). This group of stocks’ market caps resemble VIAB’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $357 million. That figure was $936 million in VIAB’s case. AXA Equitable Holdings, Inc. (NYSE:EQH) is the most popular stock in this table. On the other hand Vedanta Ltd (NYSE:VEDL) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Viacom, Inc. (NASDAQ:VIAB) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on VIAB as the stock returned 2.3% during the same period 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.
Disclosure: None. This article was originally published at Insider Monkey.