Time Warner Inc (TWX): Are Hedge Funds Right About This Stock?

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Time Warner Inc (NYSE:TWX) shareholders have witnessed an increase in support from the world’s most elite money managers of late.

In the eyes of most shareholders, hedge funds are viewed as underperforming, outdated financial vehicles of the past. While there are greater than 8000 funds in operation today, we look at the aristocrats of this club, around 450 funds. It is widely believed that this group controls the majority of the smart money’s total asset base, and by monitoring their top equity investments, we have found a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Time Warner Inc (NYSE:TWX)

Just as key, positive insider trading activity is another way to parse down the investments you’re interested in. Obviously, there are many incentives for an executive to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the useful potential of this strategy if shareholders understand what to do (learn more here).

Now, it’s important to take a look at the key action encompassing Time Warner Inc (NYSE:TWX).

How have hedgies been trading Time Warner Inc (NYSE:TWX)?

In preparation for this quarter, a total of 62 of the hedge funds we track were long in this stock, a change of 35% from the first quarter. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings substantially.

When looking at the hedgies we track, Andreas Halvorsen’s Viking Global had the largest position in Time Warner Inc (NYSE:TWX), worth close to $1.2886 billion, accounting for 7.7% of its total 13F portfolio. Coming in second is Philippe Laffont of Coatue Management, with a $685.8 million position; the fund has 8.6% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Ken Griffin’s Citadel Investment Group, Daniel S. Och’s OZ Management and John Griffin’s Blue Ridge Capital.

Now, some big names were leading the bulls’ herd. JAT Capital Management, managed by John Thaler, assembled the biggest position in Time Warner Inc (NYSE:TWX). JAT Capital Management had 158.2 million invested in the company at the end of the quarter. Panayotis Takis Sparaggis’s Alkeon Capital Management also made a $126.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Louis Bacon’s Moore Global Investments, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Alexander Mitchell’s Scopus Asset Management.

What have insiders been doing with Time Warner Inc (NYSE:TWX)?

Bullish insider trading is most useful when the company in focus has experienced transactions within the past half-year. Over the latest six-month time frame, Time Warner Inc (NYSE:TWX) has experienced zero unique insiders buying, and 9 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Time Warner Inc (NYSE:TWX). These stocks are Live Nation Entertainment, Inc. (NYSE:LYV), Starz (NASDAQ:STRZA), The Madison Square Garden Co (NASDAQ:MSG), The Walt Disney Company (NYSE:DIS), and News Corp (NASDAQ:NWSA). All of these stocks are in the entertainment – diversified industry and their market caps match TWX’s market cap.

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