Should You Consider Central European Media Enterprises Ltd. (CETV) For Your Portfolio?

Is Central European Media Enterprises Ltd. (NASDAQ:CETV) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is Central European Media Enterprises Ltd. (NASDAQ:CETV) a bargain? Maybe not, as hedge funds are reducing their bets on the stock. The number of long hedge fund positions went down by two recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Nanometrics Incorporated (NASDAQ:NANO), Handy and Harman Ltd (NASDAQ:HNH), and AEP Industries (NASDAQ:AEPI) to gather more data points.

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If you’d ask most shareholders, hedge funds are assumed to be worthless, outdated financial tools of yesteryear. While there are over 8,000 funds trading today, our researchers hone in on the leaders of this group, around 700 funds. These investment experts watch over the lion’s share of the smart money’s total capital and, by watching their first-class stock picks, Insider Monkey has spotted a few investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

With all of this in mind, we’re going to take a look at the key action regarding Central European Media Enterprises Ltd. (NASDAQ:CETV).

How have hedgies been trading Central European Media Enterprises Ltd. (NASDAQ:CETV)?

At the end of the third quarter, a total of eight of the hedge funds tracked by Insider Monkey were long this stock, a decline of 20% from the second quarter. With hedge funds’ capital changing hands, there exist a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Eric Semler’s TCS Capital Management has the number one position in Central European Media Enterprises Ltd. (NASDAQ:CETV), worth close to $24.8 million, accounting for 20.1% of its total 13F portfolio. The second-largest stake is held by Rob Citrone of Discovery Capital Management, with a $10.1 million position; 0.1% of his 13F portfolio is allocated to the company. Some other professional money managers that hold long positions include Satyen Mehta’s Neon Liberty Capital Management, Michael Thompson’s BHR Capital, and Simon Sadler’s Segantii Capital.

Because Central European Media Enterprises Ltd. (NASDAQ:CETV) has faced falling interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedgies who sold off their entire stakes last quarter. Intriguingly, Discovery Capital Management dropped the largest stake of the 700 funds watched by Insider Monkey, a position worth an estimated $62.6 million in bonds (the fund still maintains its long position). Paul Glazer’s fund, Glazer Capital, also cut its investment in this company, about $8 million worth of stock. These transactions are interesting, as total hedge fund interest fell by two funds last quarter.

Let’s go over hedge fund activity in other stocks similar to Central European Media Enterprises Ltd. (NASDAQ:CETV). These stocks are Nanometrics Incorporated (NASDAQ:NANO), Handy and Harman Ltd (NASDAQ:HNH), AEP Industries (NASDAQ:AEPI), and Newcastle Investment Corp. (NYSE:NCT). This group of stocks’ market values are closest to CETV’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NANO 7 46491 0
HNH 6 214972 -1
AEPI 12 84754 5
NCT 12 11849 1

As you can see these stocks had an average of nine hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $55 million in CETV’s case. AEP Industries (NASDAQ:AEPI) is the most popular stock in this table. On the other hand Handy and Harman Ltd (NASDAQ:HNH) is the least popular one with only six bullish hedge fund positions. While Central European Media Enterprises Ltd. (NASDAQ:CETV) is not the least popular stock in this group, hedge fund interest is still below average and falling. This is a negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AEP Industries might be a better candidate to consider a long position in.