At the end of February we announced the arrival of the first US recession since 2009 and we predicted 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 Meredith Corporation (NYSE:MDP).
Is MDP a good stock to buy now? Meredith Corporation (NYSE:MDP) was in 18 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 20. MDP investors should pay attention to a decrease in support from the world’s most elite money managers lately. There were 20 hedge funds in our database with MDP positions at the end of the second quarter. Our calculations also showed that MDP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are a multitude of signals stock market investors can use to evaluate stocks. Two of the most innovative signals are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the best fund managers can outpace the market by a healthy margin (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 let’s check out the recent hedge fund action regarding Meredith Corporation (NYSE:MDP).
Do Hedge Funds Think MDP Is A Good Stock To Buy Now?
At third quarter’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in MDP a year ago. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Among these funds, Select Equity Group held the most valuable stake in Meredith Corporation (NYSE:MDP), which was worth $56.2 million at the end of the third quarter. On the second spot was Ariel Investments which amassed $48.9 million worth of shares. Fairpointe Capital, Royce & Associates, and GAMCO Investors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Fairpointe Capital allocated the biggest weight to Meredith Corporation (NYSE:MDP), around 2.42% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, setting aside 0.71 percent of its 13F equity portfolio to MDP.
Seeing as Meredith Corporation (NYSE:MDP) has faced falling interest from the entirety of the hedge funds we track, we can see that there exists a select few hedge funds who were dropping their full holdings in the third quarter. At the top of the heap, Frederick DiSanto’s Ancora Advisors sold off the largest position of the “upper crust” of funds tracked by Insider Monkey, totaling an estimated $0.7 million in stock, and Greg Eisner’s Engineers Gate Manager was right behind this move, as the fund sold off about $0.3 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds in the third quarter.
Let’s go over hedge fund activity in other stocks similar to Meredith Corporation (NYSE:MDP). These stocks are Cara Therapeutics Inc (NASDAQ:CARA), Passage Bio, Inc. (NASDAQ:PASG), 3D Systems Corporation (NYSE:DDD), Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI), Diebold Nixdorf Incorporated (NYSE:DBD), Hawaiian Holdings, Inc. (NASDAQ:HA), and Golar LNG Limited (NASDAQ:GLNG). All of these stocks’ market caps are closest to MDP’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.4 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $163 million in MDP’s case. Golar LNG Limited (NASDAQ:GLNG) is the most popular stock in this table. On the other hand Hawaiian Holdings, Inc. (NASDAQ:HA) is the least popular one with only 9 bullish hedge fund positions. Meredith Corporation (NYSE:MDP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MDP is 64.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on MDP as the stock returned 47.9% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.