CBS Corporation (CBS): Are Hedge Funds Right About This Stock?

Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds and investors’ positions as of the end of the fourth quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of CBS Corporation (NYSE:CBS) based on that data.

CBS Corporation (NYSE:CBS) investors should pay attention to an increase in support from the world’s most elite money managers in recent months. CBS was in 64 hedge funds’ portfolios at the end of December. There were 62 hedge funds in our database with CBS holdings at the end of the previous quarter. At the end of this article we will also compare CBS to other stocks, including Franklin Resources, Inc. (NYSE:BEN), Archer Daniels Midland Company (NYSE:ADM), and SunTrust Banks, Inc. (NYSE:STI) to get a better sense of its popularity.

At the moment there are dozens of formulas investors can use to evaluate publicly traded companies. A couple of the less utilized formulas are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can beat the S&P 500 by a solid amount (see the details here).

CBS’s stock has slid by more than 14% over the past year, so before we proceed to analyzing the hedge fund sentiment towards the stock, let’s take a closer look at the latest news involving the company.

F0r the last quarter, CBS Corporation posted adjusted EPS of $0.92, in line with the Street’s expectations, while its revenue of $3.91 billion, was slightly above the consensus estimate of $3.80 billion. The operator of the most watched TV network in the US registered a 6.2% annual increase in revenue mainly due to growth in revenue from content licensing and distribution, which advanced by 16% on the year.

Recently, Credit Suisse covered the US Media and Entertainment industry and named Time Warner and CBS among its top picks. Analyst Omar Sheikh cut the EBITDA forecasts for the industry by 1.6% and 2.5% for 2016 and 2017, respectively, but kept the ‘Overweight’ rating, citing stabilizing industry trends and the attractiveness of large-cap companies, whose stocks have declined following the earnings season and amid an overall market decline. In February, Credit Suisse lowered its price target on CBS to $70 from $75, but maintained the ‘Outperform’ rating.

With all of this in mind, let’s take a look at the new action surrounding CBS Corporation (NYSE:CBS).

How are hedge funds trading CBS Corporation (NYSE:CBS)?

At Q4’s end, a total of 64 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the third quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Jonathon Jacobson’s Highfields Capital Management has the biggest position in CBS Corporation (NYSE:CBS), worth close to $513 million, corresponding to 4.4% of its total 13F portfolio. On Highfields Capital Management’s heels is Larry Robbins’ Glenview Capital, with a $408 million position; 2.3% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism comprise John Shapiro’s Chieftain Capital, Ken Griffin’s Citadel Investment Group and Philippe Laffont’s Coatue Management.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most valuable position in CBS Corporation (NYSE:CBS). Balyasny Asset Management had $129.6 million invested in the company at the end of the quarter. Brett Barakett’s Tremblant Capital also made a $59.1 million investment in the stock during the quarter. The following funds were also among the new CBS investors: Clint Carlson’s Carlson Capital, Solomon Kumin’s Folger Hill Asset Management, and Alexander Mitchell’s Scopus Asset Management.

Let’s also examine hedge fund activity in other stocks similar to CBS Corporation (NYSE:CBS). We will take a look at Franklin Resources, Inc. (NYSE:BEN), Archer Daniels Midland Company (NYSE:ADM), SunTrust Banks, Inc. (NYSE:STI), and Ross Stores, Inc. (NASDAQ:ROST). This group of stocks’ market caps are closest to CBS’s market cap.

As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $956 million, which is considerably lower compared to the $3.38 billion in CBS’s case. SunTrust Banks, Inc. (NYSE:STI) is the most popular stock in this table. On the other hand, Archer Daniels Midland Company (NYSE:ADM) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks CBS Corporation (NYSE:CBS) 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.