News Corp (NWSA): Why Do Hedge Funds Love It?

Comcast Corporation (NASDAQ:CMCSA), meanwhile, is one of the best value plays in the media industry. The stock’s dividend yield is not very robust at 1.8%, but it is well covered by Comcast’s $10 billion in cash on hand, as annual dividend payments amount to only $1.7 billion. Of the five media stocks listed here, Comcast is one of the cheapest on a P/E (7x) basis, and the cheapest on P/CF (7x) basis. Couple this with its industry-leading 15% five-year expected EPS CAGR, and there’s obvious value to be had here. Cliff Asness and AQR Capital more than doubled their position in CMCSA last quarter (here’s Cliff Asness’ entire equity portfolio).

The Walt Disney Company (NYSE:DIS) has experienced steady appreciation this year, up 30% year to date, while raising its annual dividend by 25%. Disney has managed to meet or beat EPS estimates in each of the last four quarters. The media company’s dividend yield still remains below its major peers, but future growth could be robust with the recent acquisition of the Star Wars franchise. Disney was a huge increase for Ken Fisher – founder of Fisher Asset Management – last quarter (check out Ken Fisher’s newest picks).

To recap: we believe that News Corp is an interesting play given its upcoming spinoff. The transition should allow the media company to better focus on future growth segments. News Corp’s broadcasting side should not only see real growth but also multiples expansion as the company attracts more growth-oriented investors. The publishing segment, meanwhile, will be able to explore growth through acquisitions and entries into new markets, including education. News Corp is also one of the top ten media stocks loved by hedge funds (check out our entire Top Ten).