Were Hedge Funds Right About Nexstar Media (NXST)?

At Insider Monkey, we pore over the filings of nearly 887 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31st. In this article, we will use that wealth of knowledge to determine whether or not Nexstar Media Group, Inc. (NASDAQ:NXST) makes for a good investment right now.

Nexstar Media Group, Inc. (NASDAQ:NXST) investors should be aware of an increase in enthusiasm from smart money of late. Nexstar Media Group, Inc. (NASDAQ:NXST) was in 44 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 50. There were 41 hedge funds in our database with NXST holdings at the end of September. Our calculations also showed that NXST isn’t among the 30 most popular stocks among hedge funds (click for Q4 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 124 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

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Do Hedge Funds Think NXST Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards NXST over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Seth Klarman’s Baupost Group has the largest position in Nexstar Media Group, Inc. (NASDAQ:NXST), worth close to $227.7 million, comprising 2.1% of its total 13F portfolio. Coming in second is Amy Minella of Cardinal Capital, with a $125 million position; 3.6% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism contain Ken Griffin’s Citadel Investment Group, Claus Moller’s P2 Capital Partners and Peter S. Park’s Park West Asset Management. In terms of the portfolio weights assigned to each position Calixto Global Investors allocated the biggest weight to Nexstar Media Group, Inc. (NASDAQ:NXST), around 12.5% of its 13F portfolio. Simcoe Capital Management is also relatively very bullish on the stock, earmarking 6.94 percent of its 13F equity portfolio to NXST.

As industrywide interest jumped, specific money managers have been driving this bullishness. Zimmer Partners, managed by Stuart J. Zimmer, established the most outsized position in Nexstar Media Group, Inc. (NASDAQ:NXST). Zimmer Partners had $5.5 million invested in the company at the end of the quarter. Felix Wai’s Zeno Research also made a $2 million investment in the stock during the quarter. The other funds with brand new NXST positions are Michael Rockefeller and Karl Kroeker’s Woodline Partners, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Jinghua Yan’s TwinBeech Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Nexstar Media Group, Inc. (NASDAQ:NXST) but similarly valued. We will take a look at Ashland Global Holdings Inc.. (NYSE:ASH), Flowserve Corporation (NYSE:FLS), Flowers Foods, Inc. (NYSE:FLO), Boyd Gaming Corporation (NYSE:BYD), Synovus Financial Corp. (NYSE:SNV), Pilgrim’s Pride Corporation (NASDAQ:PPC), and Penske Automotive Group, Inc. (NYSE:PAG). This group of stocks’ market values resemble NXST’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ASH 38 1114289 -8
FLS 21 148236 2
FLO 27 289063 -3
BYD 28 275982 0
SNV 33 157470 8
PPC 17 80484 -1
PAG 21 114199 3
Average 26.4 311389 0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $311 million. That figure was $891 million in NXST’s case. Ashland Global Holdings Inc.. (NYSE:ASH) is the most popular stock in this table. On the other hand Pilgrim’s Pride Corporation (NASDAQ:PPC) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Nexstar Media Group, Inc. (NASDAQ:NXST) is more popular among hedge funds. Our overall hedge fund sentiment score for NXST is 84.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks returned 13.6% in 2021 through April 30th but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on NXST as the stock returned 35.8% since the end of December (through 4/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.