Time Warner Inc (NYSE:TWX) shares are up by 2% in morning trading after the Financial Times reported that Eddy Cue, a top Apple Inc. (NASDAQ:AAPL) executive who overseas many of Apple’s services operations, broached the prospect of the silicon valley giant buying Time Warner. Time Warner, which owns HBO, Warner Bros, and other content distribution and origination assets would instantly give Apple substantial content for its internet TV initiatives. The potential acquisition would also help diversify Apple away from the iPhone. The discussions never got past the preliminary stage, however, and never involved CEO Tim Cook, so they should be taken with a grain of salt.
We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still good idea to keep an eye on hedge fund activity (see the details here). With this in mind, as the latest round of 13F filings has just ended, let’s examine the smart money sentiment towards Time Warner Inc (NYSE:TWX).
Time Warner Inc (NYSE:TWX) was in 68 hedge funds’ portfolios at the end of March. TWX has experienced a decrease in hedge fund interest of late. There were 72 hedge funds in our database with TWX holdings at the end of the previous quarter. 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 Biogen Idec Inc. (NASDAQ:BIIB), The Dow Chemical Company (NYSE:DOW), and BlackRock, Inc. (NYSE:BLK) to gather more data points.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, D. E. Shaw’s D E Shaw has the most valuable position in Time Warner Inc (NYSE:TWX), worth close to $464.4 million, amounting to 0.8% of its total 13F portfolio. The second largest stake is held by Greenlight Capital, managed by David Einhorn, which holds a $419.7 million position; the fund has 7.1% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism consist of Daniel S. Och’s OZ Management, Ken Griffin’s Citadel Investment Group, and John Brennan’s Sirios Capital Management.
On the next page we’ll look at some funds that sold off positions in Time Warner Inc during Q1, as well as compare the stock to a handful of others with similar market caps.
Judging by the fact that Time Warner Inc (NYSE:TWX) has experienced a declination in interest from the entirety of the hedge funds we track, it’s safe to say that there were a few money managers who sold off their entire stakes last quarter. At the top of the heap, Philippe Laffont’s Coatue Management cut the biggest stake of the “upper crust” of funds watched by Insider Monkey, valued at about $200.7 million in call options. Keith Meister’s fund, Corvex Capital, also sold off its call options, about $194 million worth. These moves are important to note, as aggregate hedge fund interest fell by 4 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Time Warner Inc (NYSE:TWX) but similarly valued. We will take a look at Biogen Idec Inc. (NASDAQ:BIIB), The Dow Chemical Company (NYSE:DOW), BlackRock, Inc. (NYSE:BLK), and Thermo Fisher Scientific Inc. (NYSE:TMO). This group of stocks’ market values match TWX’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 47 hedge funds with bullish positions and the average amount invested in these stocks was $2.34 billion. That figure was $3.94 billion in TWX’s case. Biogen Idec Inc. (NASDAQ:BIIB) is the most popular stock in this table. On the other hand BlackRock, Inc. (NYSE:BLK) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Time Warner Inc (NYSE:TWX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.