Is IHRT Stock A Buy or Sell?

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards iHeartMedia, Inc. (NASDAQ:IHRT).

Is IHRT stock a buy? iHeartMedia, Inc. (NASDAQ:IHRT) has seen an increase in enthusiasm from smart money in recent months. iHeartMedia, Inc. (NASDAQ:IHRT) was in 23 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 31. There were 21 hedge funds in our database with IHRT positions at the end of the third quarter. Our calculations also showed that IHRT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to take a gander at the recent hedge fund action surrounding iHeartMedia, Inc. (NASDAQ:IHRT).

Do Hedge Funds Think IHRT Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards IHRT over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Doug Silverman and Alexander Klabin’s Senator Investment Group has the most valuable position in iHeartMedia, Inc. (NASDAQ:IHRT), worth close to $39.7 million, comprising 0.8% of its total 13F portfolio. The second most bullish fund manager is Don Morgan of Brigade Capital, with a $31.2 million position; 1.8% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish comprise Daniel S. Och’s OZ Management, Edward A. Mule’s Silver Point Capital and Stephen Mildenhall’s Contrarius Investment Management. In terms of the portfolio weights assigned to each position Contrarian Capital allocated the biggest weight to iHeartMedia, Inc. (NASDAQ:IHRT), around 5.57% of its 13F portfolio. Zeno Research is also relatively very bullish on the stock, earmarking 3.13 percent of its 13F equity portfolio to IHRT.

As one would reasonably expect, some big names have jumped into iHeartMedia, Inc. (NASDAQ:IHRT) headfirst. Silver Point Capital, managed by Edward A. Mule, created the biggest position in iHeartMedia, Inc. (NASDAQ:IHRT). Silver Point Capital had $23.6 million invested in the company at the end of the quarter. Felix Wai’s Zeno Research also made a $5.3 million investment in the stock during the quarter. The following funds were also among the new IHRT investors: Charles Davidson and Joseph Jacobs’s Wexford Capital and Scott Kapnick’s HPS Investment Partners.

Let’s now take a look at hedge fund activity in other stocks similar to iHeartMedia, Inc. (NASDAQ:IHRT). These stocks are Wabash National Corporation (NYSE:WNC), Third Point Reinsurance Ltd (NYSE:TPRE), Standard Motor Products, Inc. (NYSE:SMP), Agilysys, Inc. (NASDAQ:AGYS), Humanigen, Inc. (NASDAQ:HGEN), Lantheus Holdings Inc (NASDAQ:LNTH), and Camtek LTD. (NASDAQ:CAMT). This group of stocks’ market values resemble IHRT’s market value.

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As you can see these stocks had an average of 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $122 million. That figure was $201 million in IHRT’s case. Agilysys, Inc. (NASDAQ:AGYS) is the most popular stock in this table. On the other hand Humanigen, Inc. (NASDAQ:HGEN) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks iHeartMedia, Inc. (NASDAQ:IHRT) is more popular among hedge funds. Our overall hedge fund sentiment score for IHRT is 79.3. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 12.3% in 2021 through April 19th but still managed to beat the market by 0.9 percentage points. Hedge funds were also right about betting on IHRT as the stock returned 48.3% since the end of December (through 4/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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