Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Time Inc (NYSE:TIME) investors should be aware of an increase in hedge fund interest of late. TIME was in 21 hedge funds’ portfolios at the end of September. There were 18 hedge funds in our database with TIME 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 Ambarella Inc (NASDAQ:AMBA), TherapeuticsMD Inc (OTC:TXMD), and GNC Holdings Inc (NYSE:GNC) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
How have hedgies been trading Time Inc (NYSE:TIME)?
Heading into the fourth quarter of 2016, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a 17% increase from the previous quarter. Hedge fund ownership has been volatile, over the past few quarters, though within a relatively narrow range. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Barry Rosenstein’s JANA Partners has the number one position in Time Inc (NYSE:TIME), worth close to $72.4 million, corresponding to 1.3% of its total 13F portfolio. On JANA Partners’ heels is Jim Simons of Renaissance Technologies, with an $18.2 million position. Remaining peers that hold long positions consist of David Forster and Peter Wilton’s IBIS Capital Partners, Leon Cooperman’s Omega Advisors and Ken Griffin’s Citadel Investment Group.
As industry-wide interest jumped, some big names were breaking ground themselves. Omega Advisors established the largest position in Time Inc (NYSE:TIME). Omega Advisors had $13.1 million invested in the company at the end of the quarter. Neil Chriss’ Hutchin Hill Capital also initiated a $1.5 million position during the quarter. The following funds were also among the new TIME investors: Matthew Tewksbury’s Stevens Capital Management, Glenn Russell Dubin’s Highbridge Capital Management, and Paul Tudor Jones’ Tudor Investment Corp.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Time Inc (NYSE:TIME) but similarly valued. These stocks are Ambarella Inc (NASDAQ:AMBA), TherapeuticsMD Inc (OTC:TXMD), GNC Holdings Inc (NYSE:GNC), and Dean Foods Co (NYSE:DF). This group of stocks’ market valuations resemble TIME’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $164 million. That figure was $147 million in TIME’s case. GNC Holdings Inc (NYSE:GNC) is the most popular stock in this table. On the other hand TherapeuticsMD Inc (OTC:TXMD) is the least popular one with only 13 bullish hedge fund positions. Time Inc (NYSE:TIME) 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 really love. In this regard GNC might be a better candidate to consider a long position in.