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Is New Media Investment Group Inc (NEWM) A Good Stock To Buy?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ recent losses in Facebook. Let’s take a closer look at what the funds we track think about New Media Investment Group Inc (NYSE:NEWM) in this article.

New Media Investment Group Inc (NYSE:NEWM) was in 17 hedge funds’ portfolios at the end of December. NEWM has experienced a decrease in hedge fund sentiment of late. There were 20 hedge funds in our database with NEWM positions at the end of the previous quarter. Our calculations also showed that NEWM isn’t among the 30 most popular stocks among hedge funds.

According to most shareholders, hedge funds are seen as underperforming, old financial vehicles of years past. While there are greater than 8000 funds trading at present, We hone in on the elite of this club, about 750 funds. These money managers handle bulk of the hedge fund industry’s total asset base, and by paying attention to their inimitable stock picks, Insider Monkey has unsheathed many investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship hedge fund strategy outpaced the S&P 500 index by nearly 5 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

Lee Ainslie MAVERICK CAPITAL

We’re going to check out the fresh hedge fund action surrounding New Media Investment Group Inc (NYSE:NEWM).

Hedge fund activity in New Media Investment Group Inc (NYSE:NEWM)

At the end of the fourth quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards NEWM over the last 14 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

NEWM_may2019

Among these funds, Renaissance Technologies held the most valuable stake in New Media Investment Group Inc (NYSE:NEWM), which was worth $7.9 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $7.8 million worth of shares. Moreover, Maverick Capital, Millennium Management, and D E Shaw were also bullish on New Media Investment Group Inc (NYSE:NEWM), allocating a large percentage of their portfolios to this stock.

Due to the fact that New Media Investment Group Inc (NYSE:NEWM) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedge funds that slashed their entire stakes in the third quarter. Interestingly, Noam Gottesman’s GLG Partners cut the biggest stake of the 700 funds tracked by Insider Monkey, totaling about $0.9 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund said goodbye to about $0.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as New Media Investment Group Inc (NYSE:NEWM) but similarly valued. These stocks are Infinera Corp. (NASDAQ:INFN), Armada Hoffler Properties Inc (NYSE:AHH), ACCO Brands Corporation (NYSE:ACCO), and Bryn Mawr Bank Corp. (NASDAQ:BMTC). This group of stocks’ market values match NEWM’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
INFN 16 143455 -9
AHH 9 55295 1
ACCO 21 36332 0
BMTC 8 37812 -1
Average 13.5 68224 -2.25

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 $68 million. That figure was $36 million in NEWM’s case. ACCO Brands Corporation (NYSE:ACCO) is the most popular stock in this table. On the other hand Bryn Mawr Bank Corp. (NASDAQ:BMTC) is the least popular one with only 8 bullish hedge fund positions. New Media Investment Group Inc (NYSE:NEWM) 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 are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately NEWM wasn’t nearly as popular as these 15 stock and hedge funds that were betting on NEWM were disappointed as the stock returned -4.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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

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