Is Gannett Co., Inc. (NEWM) Going To Burn These Hedge Funds ?

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Gannett Co., Inc. (NYSE:NEWM).

Is Gannett Co., Inc. (NYSE:NEWM) the right investment to pursue these days? Money managers are getting more optimistic. The number of long hedge fund positions inched up by 5 in recent months. Our calculations also showed that NEWM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.


Leon Cooperman of Omega Advisors

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s check out the new hedge fund action regarding Gannett Co., Inc. (NYSE:NEWM).

What have hedge funds been doing with Gannett Co., Inc. (NYSE:NEWM)?

At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 36% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NEWM over the last 17 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Leon Cooperman’s Omega Advisors has the most valuable position in Gannett Co., Inc. (NYSE:NEWM), worth close to $54.3 million, corresponding to 3.2% of its total 13F portfolio. Coming in second is Alden Global Capital, managed by Randall Smith, which holds a $47.7 million position; the fund has 90.4% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism contain Parag Vora’s HG Vora Capital Management, Ken Griffin’s Citadel Investment Group and Wayne Cooperman’s Cobalt Capital Management. In terms of the portfolio weights assigned to each position Alden Global Capital allocated the biggest weight to Gannett Co., Inc. (NYSE:NEWM), around 90.4% of its 13F portfolio. Cobalt Capital Management is also relatively very bullish on the stock, designating 3.33 percent of its 13F equity portfolio to NEWM.

Now, key hedge funds have been driving this bullishness. Alden Global Capital, managed by Randall Smith, initiated the largest position in Gannett Co., Inc. (NYSE:NEWM). Alden Global Capital had $47.7 million invested in the company at the end of the quarter. Parag Vora’s HG Vora Capital Management also made a $25.1 million investment in the stock during the quarter. The following funds were also among the new NEWM investors: Wayne Cooperman’s Cobalt Capital Management, Noam Gottesman’s GLG Partners, and Renaissance Technologies.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Gannett Co., Inc. (NYSE:NEWM) but similarly valued. These stocks are TG Therapeutics Inc (NASDAQ:TGTX), Kodiak Sciences Inc (NASDAQ:KOD), GTT Communications Inc (NYSE:GTT), and A10 Networks Inc (NYSE:ATEN). All of these stocks’ market caps match NEWM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TGTX 18 114737 1
KOD 6 204922 -2
GTT 13 183431 -5
ATEN 17 105496 2
Average 13.5 152147 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $152 million. That figure was $164 million in NEWM’s case. TG Therapeutics Inc (NASDAQ:TGTX) is the most popular stock in this table. On the other hand Kodiak Sciences Inc (NASDAQ:KOD) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Gannett Co., Inc. (NYSE:NEWM) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately NEWM wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on NEWM were disappointed as the stock returned -24.7% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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