In this article we will check out the progression of hedge fund sentiment towards News Corp (NASDAQ:NWS) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is NWS a good stock to buy now? The smart money was taking a pessimistic view. The number of bullish hedge fund bets shrunk by 2 recently. News Corp (NASDAQ:NWS) was in 14 hedge funds’ portfolios at the end of September. The all time high for this statistic is 17. Our calculations also showed that NWS 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). There were 16 hedge funds in our database with NWS positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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. With all of this in mind let’s view the key hedge fund action encompassing News Corp (NASDAQ:NWS).
Do Hedge Funds Think NWS Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NWS over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the number one position in News Corp (NASDAQ:NWS), worth close to $15.6 million, corresponding to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Yacktman Asset Management, led by Donald Yacktman, holding a $9.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that are bullish consist of Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Israel Englander’s Millennium Management and Phill Gross and Robert Atchinson’s Adage Capital Management. In terms of the portfolio weights assigned to each position Yacktman Asset Management allocated the biggest weight to News Corp (NASDAQ:NWS), around 0.14% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, dishing out 0.06 percent of its 13F equity portfolio to NWS.
Due to the fact that News Corp (NASDAQ:NWS) has faced falling interest from the entirety of the hedge funds we track, it’s safe to say that there were a few hedgies that slashed their positions entirely last quarter. Intriguingly, Ken Griffin’s Citadel Investment Group cut the biggest investment of all the hedgies tracked by Insider Monkey, worth close to $1.2 million in stock, and Greg Eisner’s Engineers Gate Manager was right behind this move, as the fund dropped about $0.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as News Corp (NASDAQ:NWS) but similarly valued. These stocks are Equitable Holdings, Inc. (NYSE:EQH), CyrusOne Inc (NASDAQ:CONE), Cna Financial Corporation (NYSE:CNA), Westlake Chemical Corporation (NYSE:WLK), Gaming and Leisure Properties Inc (NASDAQ:GLPI), Bill.com Holdings, Inc. (NYSE:BILL), and BorgWarner Inc. (NYSE:BWA). This group of stocks’ market values match NWS’s market value.
|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 30.4 hedge funds with bullish positions and the average amount invested in these stocks was $651 million. That figure was $39 million in NWS’s case. Bill.com Holdings, Inc. (NYSE:BILL) is the most popular stock in this table. On the other hand Cna Financial Corporation (NYSE:CNA) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks News Corp (NASDAQ:NWS) is even less popular than CNA. Our overall hedge fund sentiment score for NWS is 27.7. 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. Hedge funds clearly dropped the ball on NWS 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on NWS as the stock returned 31.9% since Q3 (through December 8th) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.