We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 835 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Grupo Televisa SAB (NYSE:TV).
Is Grupo Televisa SAB (NYSE:TV) a buy here? The smart money is getting more bullish. The number of bullish hedge fund positions went up by 4 lately. Our calculations also showed that TV isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Andrew Raab of FPR Partners
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to check out the latest hedge fund action surrounding Grupo Televisa SAB (NYSE:TV).
What have hedge funds been doing with Grupo Televisa SAB (NYSE:TV)?
At the end of the fourth quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TV over the last 18 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
The largest stake in Grupo Televisa SAB (NYSE:TV) was held by FPR Partners, which reported holding $461.3 million worth of stock at the end of September. It was followed by Bill & Melinda Gates Foundation Trust with a $198 million position. Other investors bullish on the company included Renaissance Technologies, MIG Capital, and Intermede Investment Partners. In terms of the portfolio weights assigned to each position FPR Partners allocated the biggest weight to Grupo Televisa SAB (NYSE:TV), around 9.58% of its 13F portfolio. Steel Canyon Capital is also relatively very bullish on the stock, setting aside 6.98 percent of its 13F equity portfolio to TV.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Bailard Inc, managed by Thomas Bailard, created the most outsized position in Grupo Televisa SAB (NYSE:TV). Bailard Inc had $0.8 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $0.7 million position during the quarter. The following funds were also among the new TV investors: Minhua Zhang’s Weld Capital Management, Donald Sussman’s Paloma Partners, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s check out hedge fund activity in other stocks similar to Grupo Televisa SAB (NYSE:TV). We will take a look at Entegris Inc (NASDAQ:ENTG), Reata Pharmaceuticals, Inc. (NASDAQ:RETA), Dr. Reddy’s Laboratories Limited (NYSE:RDY), and Americold Realty Trust (NYSE:COLD). This group of stocks’ market values are closest to TV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENTG | 24 | 775840 | -6 |
| RETA | 29 | 651033 | 7 |
| RDY | 12 | 109916 | -1 |
| COLD | 26 | 360194 | -5 |
| Average | 22.75 | 474246 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $474 million. That figure was $995 million in TV’s case. Reata Pharmaceuticals, Inc. (NASDAQ:RETA) is the most popular stock in this table. On the other hand Dr. Reddy’s Laboratories Limited (NYSE:RDY) is the least popular one with only 12 bullish hedge fund positions. Grupo Televisa SAB (NYSE:TV) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately TV wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TV investors were disappointed as the stock returned -53.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
