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Will Viacom, Inc. (VIAB) Burn These Hedge Funds ?

Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before the Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first half of 2019, most investors recovered all of their Q4 losses as sentiment shifted and optimism dominated the US China trade negotiations. Nevertheless, many of the stocks that delivered strong returns in the first half still sport strong fundamentals and their gains were more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Viacom, Inc. (NASDAQ:VIAB) changed recently.

Viacom, Inc. (NASDAQ:VIAB) investors should be aware of an increase in support from the world’s most elite money managers in recent months. VIAB was in 41 hedge funds’ portfolios at the end of the second quarter of 2019. There were 38 hedge funds in our database with VIAB holdings at the end of the previous quarter. Our calculations also showed that VIAB isn’t among the 30 most popular stocks among hedge funds (view the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are dozens of signals shareholders use to value their stock investments. A couple of the most innovative signals are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the elite money managers can beat the market by a healthy margin (see the details here).

VIAB_oct2019

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the fresh hedge fund action surrounding Viacom, Inc. (NASDAQ:VIAB).

How have hedgies been trading Viacom, Inc. (NASDAQ:VIAB)?

At the end of the second quarter, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VIAB over the last 16 quarters. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Charles Davidson - Wexford Capital

Among these funds, AQR Capital Management held the most valuable stake in Viacom, Inc. (NASDAQ:VIAB), which was worth $307.2 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $158.8 million worth of shares. Moreover, Ariel Investments, GAMCO Investors, and Arrowstreet Capital were also bullish on Viacom, Inc. (NASDAQ:VIAB), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, specific money managers have jumped into Viacom, Inc. (NASDAQ:VIAB) headfirst. Honeycomb Asset Management, managed by David Fiszel, initiated the most outsized position in Viacom, Inc. (NASDAQ:VIAB). Honeycomb Asset Management had $44.8 million invested in the company at the end of the quarter. Charles Davidson and Joseph Jacobs’s Wexford Capital also made a $9.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Hintze’s CQS Cayman LP, Crispin Odey’s Odey Asset Management Group, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Viacom, Inc. (NASDAQ:VIAB) but similarly valued. These stocks are Textron Inc. (NYSE:TXT), The Liberty SiriusXM Group (NASDAQ:LSXMA), InterContinental Hotels Group PLC (NYSE:IHG), and Campbell Soup Company (NYSE:CPB). This group of stocks’ market valuations match VIAB’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TXT 23 617924 -1
LSXMA 34 1328002 -7
IHG 4 21692 -1
CPB 26 953095 -2
Average 21.75 730178 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $730 million. That figure was $1053 million in VIAB’s case. The Liberty SiriusXM Group (NASDAQ:LSXMA) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Viacom, Inc. (NASDAQ:VIAB) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately VIAB wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on VIAB were disappointed as the stock returned -18.9% during the third quarter 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 many of these stocks already outperformed the market in Q3.

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

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