Should I Avoid Fox Corporation (FOXA)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 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’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Fox Corporation (NASDAQ:FOXA) in this article.

Fox Corporation (NASDAQ:FOXA) investors should pay attention to a decrease in support from the world’s most elite money managers lately. Fox Corporation (NASDAQ:FOXA) was in 38 hedge funds’ portfolios at the end of March. The all time high for this statistic is 78. Our calculations also showed that FOXA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Seth Klarman of Baupost Group

Seth Klarman of Baupost Group

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s take a look at the key hedge fund action encompassing Fox Corporation (NASDAQ:FOXA).

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

At the end of March, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the fourth quarter of 2020. On the other hand, there were a total of 38 hedge funds with a bullish position in FOXA a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Seth Klarman’s Baupost Group has the number one position in Fox Corporation (NASDAQ:FOXA), worth close to $274.8 million, corresponding to 2.2% of its total 13F portfolio. The second largest stake is held by Yacktman Asset Management, led by Donald Yacktman, holding a $100.1 million position; the fund has 1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions encompass Renaissance Technologies, Brandon Haley’s Holocene Advisors and Stephen Mildenhall’s Contrarius Investment Management. In terms of the portfolio weights assigned to each position Hunting Hill Global Capital allocated the biggest weight to Fox Corporation (NASDAQ:FOXA), around 6.97% of its 13F portfolio. 59 North Capital is also relatively very bullish on the stock, designating 6.92 percent of its 13F equity portfolio to FOXA.

Due to the fact that Fox Corporation (NASDAQ:FOXA) has experienced bearish sentiment from the smart money, logic holds that there was a specific group of funds who were dropping their full holdings last quarter. Interestingly, Michael Rockefeller and KarláKroeker’s Woodline Partners dumped the biggest position of the 750 funds watched by Insider Monkey, worth close to $25.6 million in stock. Jonathan Auerbach’s fund, Hound Partners, also dumped its stock, about $21.7 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 1 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Fox Corporation (NASDAQ:FOXA) but similarly valued. We will take a look at W.W. Grainger, Inc. (NYSE:GWW), Enphase Energy Inc (NASDAQ:ENPH), Martin Marietta Materials, Inc. (NYSE:MLM), West Pharmaceutical Services Inc. (NYSE:WST), Lyft, Inc. (NASDAQ:LYFT), Ameren Corporation (NYSE:AEE), and Energy Transfer L.P. (NYSE:ET). This group of stocks’ market valuations are similar to FOXA’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GWW 30 351308 0
ENPH 49 803938 1
MLM 41 1951007 0
WST 26 419487 -8
LYFT 60 1954603 8
AEE 19 266021 0
ET 25 647725 0
Average 35.7 913441 0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.7 hedge funds with bullish positions and the average amount invested in these stocks was $913 million. That figure was $865 million in FOXA’s case. Lyft, Inc. (NASDAQ:LYFT) is the most popular stock in this table. On the other hand Ameren Corporation (NYSE:AEE) is the least popular one with only 19 bullish hedge fund positions. Fox Corporation (NASDAQ:FOXA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FOXA is 41.8. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately FOXA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FOXA were disappointed as the stock returned 6.2% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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