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How Did Outfront Media Inc (OUT) Compare Against Top Hedge Fund Stocks in 2019?

We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained more than 57% each. Hedge funds’ top 3 stock picks returned 45.7% last year and beat the S&P 500 ETFs by more than 14 percentage points. That’s a big deal. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Is Outfront Media Inc (NYSE:OUT) a buy here? Prominent investors are turning bullish. The number of long hedge fund bets went up by 7 recently. Our calculations also showed that OUT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

To most market participants, hedge funds are seen as slow, old financial tools of yesteryear. While there are more than 8000 funds in operation at the moment, Our experts look at the crème de la crème of this group, around 750 funds. These money managers command most of the hedge fund industry’s total capital, and by monitoring their best equity investments, Insider Monkey has revealed many investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

RENAISSANCE TECHNOLOGIES

Jim Simons of Renaissance Technologies

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock is still extremely cheap despite already gaining 20 percent. With all of this in mind we’re going to go over the latest hedge fund action encompassing Outfront Media Inc (NYSE:OUT).

Hedge fund activity in Outfront Media Inc (NYSE:OUT)

Heading into the fourth quarter of 2019, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 32% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in OUT a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

More specifically, Select Equity Group was the largest shareholder of Outfront Media Inc (NYSE:OUT), with a stake worth $118.2 million reported as of the end of September. Trailing Select Equity Group was Renaissance Technologies, which amassed a stake valued at $108 million. Jericho Capital Asset Management, Echo Street Capital Management, and Land & Buildings Investment 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 Land & Buildings Investment Management allocated the biggest weight to Outfront Media Inc (NYSE:OUT), around 6.14% of its 13F portfolio. Jericho Capital Asset Management is also relatively very bullish on the stock, dishing out 5.53 percent of its 13F equity portfolio to OUT.

As aggregate interest increased, some big names have been driving this bullishness. Land & Buildings Investment Management, managed by Jonathan Litt, assembled the largest position in Outfront Media Inc (NYSE:OUT). Land & Buildings Investment Management had $27.8 million invested in the company at the end of the quarter. Ken Heebner’s Capital Growth Management also initiated a $4.2 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Richard Driehaus’s Driehaus Capital, and Minhua Zhang’s Weld Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Outfront Media Inc (NYSE:OUT) but similarly valued. These stocks are Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), The Medicines Company (NASDAQ:MDCO), Helen of Troy Limited (NASDAQ:HELE), and Repligen Corporation (NASDAQ:RGEN). All of these stocks’ market caps are similar to OUT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AJRD 21 465161 3
MDCO 32 1149542 -1
HELE 14 206819 -6
RGEN 23 223018 1
Average 22.5 511135 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $511 million. That figure was $478 million in OUT’s case. The Medicines Company (NASDAQ:MDCO) is the most popular stock in this table. On the other hand Helen of Troy Limited (NASDAQ:HELE) is the least popular one with only 14 bullish hedge fund positions. Outfront Media Inc (NYSE:OUT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on OUT as the stock returned 56.8% in 2019 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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