Is NXST A Good Stock To Buy Now?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Nexstar Media Group, Inc. (NASDAQ:NXST).

Is NXST a good stock to buy now? Nexstar Media Group, Inc. (NASDAQ:NXST) investors should be aware of a decrease in activity from the world’s largest hedge funds of late. Nexstar Media Group, Inc. (NASDAQ:NXST) was in 41 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 50. There were 42 hedge funds in our database with NXST positions at the end of the second quarter. Our calculations also showed that NXST 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.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Matthew Hulsizer PEAK6 Capital

Matthew Hulsizer of PEAK6 Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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 review the recent hedge fund action regarding Nexstar Media Group, Inc. (NASDAQ:NXST).

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

At the end of the third quarter, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -2% from one quarter earlier. On the other hand, there were a total of 35 hedge funds with a bullish position in NXST a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is NXST A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Seth Klarman’s Baupost Group has the largest position in Nexstar Media Group, Inc. (NASDAQ:NXST), worth close to $187.5 million, comprising 2% of its total 13F portfolio. Coming in second is P2 Capital Partners, led by Claus Moller, holding a $95.2 million position; 7.5% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism consist of Amy Minella’s Cardinal Capital, Peter S. Park’s Park West Asset Management and Jonathan Auerbach’s Hound Partners. In terms of the portfolio weights assigned to each position Alden Global Capital allocated the biggest weight to Nexstar Media Group, Inc. (NASDAQ:NXST), around 8.31% of its 13F portfolio. Calixto Global Investors is also relatively very bullish on the stock, earmarking 7.98 percent of its 13F equity portfolio to NXST.

Since Nexstar Media Group, Inc. (NASDAQ:NXST) has experienced declining sentiment from hedge fund managers, it’s safe to say that there were a few money managers that slashed their full holdings last quarter. At the top of the heap, Mendel Hui’s Isomer Partners dropped the biggest position of all the hedgies monitored by Insider Monkey, valued at close to $25.1 million in stock, and Eric F. Billings’s Billings Capital Management was right behind this move, as the fund sold off about $8.3 million worth. These moves are important to note, as total hedge fund interest was cut by 1 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Nexstar Media Group, Inc. (NASDAQ:NXST) but similarly valued. We will take a look at The Timken Company (NYSE:TKR), Mattel, Inc. (NASDAQ:MAT), Companhia Siderurgica Nacional (NYSE:SID), Acuity Brands, Inc. (NYSE:AYI), Virgin Galactic Holdings, Inc. (NYSE:SPCE), Wingstop Inc (NASDAQ:WING), and Medallia, Inc. (NYSE:MDLA). This group of stocks’ market values resemble NXST’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TKR 34 240044 3
MAT 26 724311 1
SID 7 35104 0
AYI 38 836103 0
SPCE 24 76924 2
WING 32 365263 4
MDLA 24 382834 6
Average 26.4 380083 2.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $380 million. That figure was $732 million in NXST’s case. Acuity Brands, Inc. (NYSE:AYI) is the most popular stock in this table. On the other hand Companhia Siderurgica Nacional (NYSE:SID) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Nexstar Media Group, Inc. (NASDAQ:NXST) is more popular among hedge funds. Our overall hedge fund sentiment score for NXST is 78.6. 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 returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on NXST as the stock returned 15.8% since the end of September (through 12/14) 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.

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