Is Entercom Communications Corp. (ETM) A Good Stock To Buy?

The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Entercom Communications Corp. (NYSE:ETM).

Is Entercom Communications Corp. (NYSE:ETM) a first-rate investment now? Investors who are in the know are in an optimistic mood. The number of long hedge fund bets advanced by 2 lately. ETM was in 10 hedge funds’ portfolios at the end of the third quarter of 2015. There were 8 hedge funds in our database with ETM holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as TICC Capital Corp. (NASDAQ:TICC), Stonegate Bank (NASDAQ:SGBK), and Noodles & Co (NASDAQ:NDLS) to gather more data points.

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At the moment there are a lot of indicators stock market investors employ to value their holdings. Two of the best indicators are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the top fund managers can outpace the market by a very impressive amount (see the details here).

Now, we’re going to check out the recent action surrounding Entercom Communications Corp. (NYSE:ETM).

How have hedgies been trading Entercom Communications Corp. (NYSE:ETM)?

Heading into Q4, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the previous quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Brandon Osten’s Venator Capital Management has the number one position in Entercom Communications Corp. (NYSE:ETM), worth close to $18.9 million, accounting for 26.2% of its total 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $1.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish comprise D. E. Shaw’s D E Shaw and Ken Gray and Steve Walsh’s Bryn Mawr Capital.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Renaissance Technologies established the biggest position in Entercom Communications Corp. (NYSE:ETM). Renaissance Technologies had $0.5 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.3 million position during the quarter. The only other fund with a brand new ETM position is Matthew Hulsizer’s PEAK6 Capital Management.

Let’s go over hedge fund activity in other stocks similar to Entercom Communications Corp. (NYSE:ETM). These stocks are TICC Capital Corp. (NASDAQ:TICC), Stonegate Bank (NASDAQ:SGBK), Noodles & Co (NASDAQ:NDLS), and Century Aluminum Co (NASDAQ:CENX). All of these stocks’ market caps match ETM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TICC 8 28929 -1
SGBK 9 10794 1
NDLS 7 14840 -2
CENX 14 25847 -10

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $23 million in ETM’s case. Century Aluminum Co (NASDAQ:CENX) is the most popular stock in this table. On the other hand Noodles & Co (NASDAQ:NDLS) is the least popular one with only 7 bullish hedge fund positions. Entercom Communications Corp. (NYSE:ETM) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CENX might be a better candidate to consider a long position.