Is Hemisphere Media Group Inc (HMTV) A Good Stock To Buy?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Hemisphere Media Group Inc (NASDAQ:HMTV) based on that data.

Hemisphere Media Group Inc (NASDAQ:HMTV) investors should pay attention to a decrease in hedge fund interest recently. Our calculations also showed that HMTV 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.

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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

William Graves Boardman Bay Capital

William Graves of Boardman Bay Capital

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. 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 already gained 20 percent. Now let’s take a glance at the recent hedge fund action encompassing Hemisphere Media Group Inc (NASDAQ:HMTV).

What have hedge funds been doing with Hemisphere Media Group Inc (NASDAQ:HMTV)?

Heading into the fourth quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in HMTV a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Hemisphere Media Group Inc (NASDAQ:HMTV) was held by Fine Capital Partners, which reported holding $25 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $9.5 million position. Other investors bullish on the company included Boardman Bay Capital Management, Winton Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Fine Capital Partners allocated the biggest weight to Hemisphere Media Group Inc (NASDAQ:HMTV), around 5.64% of its 13F portfolio. Boardman Bay Capital Management is also relatively very bullish on the stock, designating 1.05 percent of its 13F equity portfolio to HMTV.

Judging by the fact that Hemisphere Media Group Inc (NASDAQ:HMTV) has witnessed a decline in interest from hedge fund managers, it’s easy to see that there is a sect of hedge funds who sold off their full holdings in the third quarter. Intriguingly, Thomas Ellis and Todd Hammer’s North Run Capital dumped the biggest investment of all the hedgies watched by Insider Monkey, worth close to $2.3 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund said goodbye to about $0.3 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 1 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Hemisphere Media Group Inc (NASDAQ:HMTV). These stocks are Primo Water Corporation (NASDAQ:PRMW), REX American Resources Corp (NYSE:REX), Paysign, Inc. (NASDAQ:PAYS), and Independent Bank Corporation(MI) (NASDAQ:IBCP). This group of stocks’ market valuations are closest to HMTV’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PRMW 17 106864 5
REX 8 43699 0
PAYS 11 30078 3
IBCP 13 49879 2
Average 12.25 57630 2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $58 million. That figure was $37 million in HMTV’s case. Primo Water Corporation (NASDAQ:PRMW) is the most popular stock in this table. On the other hand REX American Resources Corp (NYSE:REX) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Hemisphere Media Group Inc (NASDAQ:HMTV) is even less popular than REX. Hedge funds clearly dropped the ball on HMTV as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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. A small number of hedge funds were also right about betting on HMTV as the stock returned 14.6% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.

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