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Should You Avoid Fox Corporation (FOX)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2019. In this article we are going to take a look at smart money sentiment towards Fox Corporation (NASDAQ:FOX).

Fox Corporation (NASDAQ:FOX) shareholders have witnessed a decrease in hedge fund sentiment in recent months. FOX was in 27 hedge funds’ portfolios at the end of September. There were 30 hedge funds in our database with FOX holdings at the end of the previous quarter. Our calculations also showed that FOX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most traders, hedge funds are viewed as worthless, old financial tools of yesteryear. While there are over 8000 funds trading at the moment, Our experts choose to focus on the leaders of this group, around 750 funds. These hedge fund managers shepherd most of the hedge fund industry’s total asset base, and by monitoring their finest picks, Insider Monkey has unearthed a number of investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

BAUPOST GROUP Seth Klarman

Seth Klarman of Baupost Group

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the key hedge fund action encompassing Fox Corporation (NASDAQ:FOX).

What does smart money think about Fox Corporation (NASDAQ:FOX)?

At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FOX over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Yacktman Asset Management was the largest shareholder of Fox Corporation (NASDAQ:FOX), with a stake worth $243.6 million reported as of the end of September. Trailing Yacktman Asset Management was Baupost Group, which amassed a stake valued at $179.2 million. Eagle Capital Management, Renaissance Technologies, and Empyrean Capital Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Steel Canyon Capital allocated the biggest weight to Fox Corporation (NASDAQ:FOX), around 5.27% of its 13F portfolio. 3G Capital is also relatively very bullish on the stock, setting aside 3.19 percent of its 13F equity portfolio to FOX.

Because Fox Corporation (NASDAQ:FOX) has witnessed a decline in interest from hedge fund managers, logic holds that there was a specific group of hedge funds that decided to sell off their positions entirely last quarter. At the top of the heap, Farallon Capital sold off the largest position of the 750 funds tracked by Insider Monkey, totaling about $43.2 million in stock. Robert Pohly’s fund, Samlyn Capital, also sold off its stock, about $30.7 million worth. These moves are important to note, as total hedge fund interest dropped by 3 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Fox Corporation (NASDAQ:FOX) but similarly valued. These stocks are Fox Corporation (NASDAQ:FOXA), Rogers Communications Inc. (NYSE:RCI), D.R. Horton, Inc. (NYSE:DHI), and ResMed Inc. (NYSE:RMD). All of these stocks’ market caps are similar to FOX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FOXA 48 2457821 -12
RCI 21 440152 7
DHI 53 2555525 6
RMD 20 135795 10
Average 35.5 1397323 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.5 hedge funds with bullish positions and the average amount invested in these stocks was $1397 million. That figure was $849 million in FOX’s case. D.R. Horton, Inc. (NYSE:DHI) is the most popular stock in this table. On the other hand ResMed Inc. (NYSE:RMD) is the least popular one with only 20 bullish hedge fund positions. Fox Corporation (NASDAQ:FOX) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on FOX as the stock returned 10.9% during the first two months of Q4 and outperformed the market by an even larger margin.

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

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