The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31st. We at Insider Monkey have made an extensive database of more than 887 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Outfront Media Inc. (REIT) (NYSE:OUT) based on those filings.
Is OUT stock a buy or sell? Prominent investors were getting more bullish. The number of bullish hedge fund bets rose by 2 in recent months. Outfront Media Inc. (REIT) (NYSE:OUT) was in 38 hedge funds’ portfolios at the end of December. The all time high for this statistic is 38. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that OUT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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. Now we’re going to take a look at the fresh hedge fund action encompassing Outfront Media Inc. (REIT) (NYSE:OUT).
Do Hedge Funds Think OUT Is A Good Stock To Buy Now?
At the end of December, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. By comparison, 31 hedge funds held shares or bullish call options in OUT a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ricky Sandler’s Eminence Capital has the number one position in Outfront Media Inc. (REIT) (NYSE:OUT), worth close to $97.6 million, amounting to 0.9% of its total 13F portfolio. Coming in second is Southpoint Capital Advisors, managed by John Smith Clark, which holds a $77.6 million position; 1.4% of its 13F portfolio is allocated to the company. Other peers that hold long positions include Ken Griffin’s Citadel Investment Group, Richard Mashaal’s Rima Senvest Management and Josh Resnick’s Jericho Capital Asset Management. In terms of the portfolio weights assigned to each position Collaborative Holdings Management allocated the biggest weight to Outfront Media Inc. (REIT) (NYSE:OUT), around 6.41% of its 13F portfolio. Hidden Lake Asset Management is also relatively very bullish on the stock, setting aside 5.7 percent of its 13F equity portfolio to OUT.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Fir Tree, managed by Jeffrey Tannenbaum, assembled the largest position in Outfront Media Inc. (REIT) (NYSE:OUT). Fir Tree had $43.9 million invested in the company at the end of the quarter. Kevin D. Eng’s Columbus Hill Capital Management also made a $30.7 million investment in the stock during the quarter. The other funds with brand new OUT positions are Bijan Modanlou, Joseph Bou-Saba, and Jayaveera Kodali’s Alta Park Capital, Spencer M. Waxman’s Shannon River Fund Management, and Kevin Mok’s Hidden Lake Asset Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Outfront Media Inc. (REIT) (NYSE:OUT) but similarly valued. We will take a look at Inovalon Holdings Inc (NASDAQ:INOV), Dana Incorporated (NYSE:DAN), Mr. Cooper Group Inc. (NASDAQ:COOP), IGM Biosciences, Inc. (NASDAQ:IGMS), BancorpSouth Bank (NYSE:BXS), Asbury Automotive Group, Inc. (NYSE:ABG), and Taro Pharmaceutical Industries Ltd. (NYSE:TARO). This group of stocks’ market valuations resemble OUT’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 19.1 hedge funds with bullish positions and the average amount invested in these stocks was $380 million. That figure was $759 million in OUT’s case. Dana Incorporated (NYSE:DAN) is the most popular stock in this table. On the other hand Taro Pharmaceutical Industries Ltd. (NYSE:TARO) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Outfront Media Inc. (REIT) (NYSE:OUT) is more popular among hedge funds. Our overall hedge fund sentiment score for OUT is 87. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on OUT as the stock returned 17.6% since the end of December (through 3/19) 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.