How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Fox Corporation (NASDAQ:FOXA).
Is FOXA a good stock to buy? Fox Corporation (NASDAQ:FOXA) was in 32 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 78. FOXA has experienced a decrease in hedge fund sentiment lately. There were 35 hedge funds in our database with FOXA positions at the end of the second quarter. Our calculations also showed that FOXA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Donald Yacktman of Yacktman Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to take a look at the recent hedge fund action regarding Fox Corporation (NASDAQ:FOXA).
Do Hedge Funds Think FOXA Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the second quarter of 2021. On the other hand, there were a total of 32 hedge funds with a bullish position in FOXA a year ago. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
The largest stake in Fox Corporation (NASDAQ:FOXA) was held by Citadel Investment Group, which reported holding $142.1 million worth of stock at the end of September. It was followed by Yacktman Asset Management with a $109.1 million position. Other investors bullish on the company included Balyasny Asset Management, Millennium Management, and Adage Capital Management. In terms of the portfolio weights assigned to each position Zeno Research allocated the biggest weight to Fox Corporation (NASDAQ:FOXA), around 6.33% of its 13F portfolio. Hi-Line Capital Management is also relatively very bullish on the stock, designating 2.21 percent of its 13F equity portfolio to FOXA.
Due to the fact that Fox Corporation (NASDAQ:FOXA) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few funds that decided to sell off their entire stakes last quarter. At the top of the heap, Stuart J. Zimmer’s Zimmer Partners sold off the biggest investment of the 750 funds followed by Insider Monkey, valued at about $25.1 million in stock, and Michael Rockefeller and KarláKroeker’s Woodline Partners was right behind this move, as the fund said goodbye to about $16.8 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 3 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Fox Corporation (NASDAQ:FOXA) but similarly valued. These stocks are DISH Network Corp. (NASDAQ:DISH), Verisign, Inc. (NASDAQ:VRSN), Huntington Bancshares Incorporated (NASDAQ:HBAN), ORIX Corporation (NYSE:IX), Invitation Homes Inc. (NYSE:INVH), Catalent Inc (NYSE:CTLT), and Ginkgo Bioworks Holdings Inc. (NYSE:DNA). This group of stocks’ market caps are similar to FOXA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DISH | 51 | 2439908 | 0 |
| VRSN | 40 | 5398949 | -1 |
| HBAN | 27 | 298895 | -6 |
| IX | 4 | 5007 | 0 |
| INVH | 36 | 824544 | 3 |
| CTLT | 38 | 1113573 | -2 |
| DNA | 32 | 5696252 | 32 |
| Average | 32.6 | 2253875 | 3.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.6 hedge funds with bullish positions and the average amount invested in these stocks was $2254 million. That figure was $617 million in FOXA’s case. DISH Network Corp. (NASDAQ:DISH) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 4 bullish hedge fund positions. Fox Corporation (NASDAQ:FOXA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FOXA is 44.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately FOXA wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); FOXA investors were disappointed as the stock returned -11% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
