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 (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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. We at Insider Monkey have plowed through 835 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of The New York Times Company (NYSE:NYT).
Is The New York Times Company (NYSE:NYT) ready to rally soon? Prominent investors are taking a bearish view. The number of bullish hedge fund bets decreased by 3 recently. Our calculations also showed that NYT 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).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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.
Gil Simon of SoMa Equity 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. With all of this in mind we’re going to review the new hedge fund action surrounding The New York Times Company (NYSE:NYT).
What does smart money think about The New York Times Company (NYSE:NYT)?
At Q4’s end, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. On the other hand, there were a total of 32 hedge funds with a bullish position in NYT a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Darsana Capital Partners held the most valuable stake in The New York Times Company (NYSE:NYT), which was worth $386 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $181.6 million worth of shares. OZ Management, Slate Path Capital, and SoMa Equity 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 Darsana Capital Partners allocated the biggest weight to The New York Times Company (NYSE:NYT), around 13.16% of its 13F portfolio. Shannon River Fund Management is also relatively very bullish on the stock, dishing out 10.43 percent of its 13F equity portfolio to NYT.
Seeing as The New York Times Company (NYSE:NYT) has experienced bearish sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of money managers that elected to cut their full holdings heading into Q4. At the top of the heap, Seth Wunder’s Black-and-White Capital dumped the largest stake of the 750 funds monitored by Insider Monkey, comprising about $11.4 million in stock, and Zachary Miller’s Parian Global Management was right behind this move, as the fund dumped about $9.8 million worth. These transactions are important to note, as total hedge fund interest dropped by 3 funds heading into Q4.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as The New York Times Company (NYSE:NYT) but similarly valued. These stocks are Air Lease Corp (NYSE:AL), Eaton Vance Corp (NYSE:EV), JetBlue Airways Corporation (NASDAQ:JBLU), and Smartsheet Inc. (NYSE:SMAR). This group of stocks’ market valuations are closest to NYT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AL | 23 | 465385 | -1 |
| EV | 24 | 57872 | 7 |
| JBLU | 35 | 668369 | 9 |
| SMAR | 44 | 1652600 | -6 |
| Average | 31.5 | 711057 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.5 hedge funds with bullish positions and the average amount invested in these stocks was $711 million. That figure was $1408 million in NYT’s case. Smartsheet Inc. (NYSE:SMAR) is the most popular stock in this table. On the other hand Air Lease Corp (NYSE:AL) is the least popular one with only 23 bullish hedge fund positions. The New York Times Company (NYSE:NYT) is not the most popular stock in this group but hedge fund interest is still above average. 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 17.4% in 2020 through March 25th but still beat the market by 5.5 percentage points. Hedge funds were also right about betting on NYT as the stock returned 1.2% during the first quarter (through March 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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.
