Should You Avoid Graham Holdings Co (GHC)?

We already know that not all hedge funds are bullish on the stock and some hedge funds actually dropped their positions entirely. Interestingly, John Smith Clark’s Southpoint Capital Advisors dropped the largest position of the “upper crust” of funds tracked by Insider Monkey, valued at about $14.7 million in stock, and Prasad Phatak and Chris Koranda’s Tappan Street Partners was right behind this move, as the fund dropped about $4.4 million worth of shares.

Let’s check out hedge fund activity in other stocks similar to Graham Holdings Co (NYSE:GHC). These stocks are Ellie Mae Inc (NYSE:ELLI), Tenet Healthcare Corp (NYSE:THC), Inovalon Holdings Inc (NASDAQ:INOV), and CoreSite Realty Corp (NYSE:COR). This group of stocks’ market values are similar to GHC’s market value.

As you can see these stocks had an average of 21 funds with bullish positions and the average amount invested in these stocks was $279 million, compared to $595 million in GHC’s case. Tenet Healthcare Corp (NYSE:THC) is the most popular stock in this table. On the other hand Inovalon Holdings Inc (NASDAQ:INOV) is the least popular one with only four bullish hedge fund positions. Graham Holdings Co (NYSE:GHC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Tenet Healthcare Corp (NYSE:THC) might be a better candidate to consider taking a long position in.