We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57% each. Hedge funds’ top 3 stock picks returned 44.6% this year and beat the S&P 500 ETFs by nearly 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Clear Channel Outdoor Holdings, Inc. (NYSE:CCO).
Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) was in 43 hedge funds’ portfolios at the end of September. CCO investors should pay attention to an increase in hedge fund interest lately. There were 32 hedge funds in our database with CCO positions at the end of the previous quarter. Our calculations also showed that CCO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Andy Redleaf of Whitebox Advisors
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind we’re going to review the key hedge fund action regarding Clear Channel Outdoor Holdings, Inc. (NYSE:CCO).
How have hedgies been trading Clear Channel Outdoor Holdings, Inc. (NYSE:CCO)?
At the end of the third quarter, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 34% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CCO over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Kenneth Mario Garschina’s Mason Capital Management has the most valuable position in Clear Channel Outdoor Holdings, Inc. (NYSE:CCO), worth close to $48.8 million, accounting for 11.9% of its total 13F portfolio. Sitting at the No. 2 spot is D E Shaw, managed by David E. Shaw, which holds a $43.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish contain Christopher Pucillo’s Solus Alternative Asset Management, Bruce J. Richards and Louis Hanover’s Marathon Asset Management and Andy Redleaf’s Whitebox Advisors. In terms of the portfolio weights assigned to each position Marathon Asset Management allocated the biggest weight to Clear Channel Outdoor Holdings, Inc. (NYSE:CCO), around 12.69% of its 13F portfolio. Mason Capital Management is also relatively very bullish on the stock, earmarking 11.9 percent of its 13F equity portfolio to CCO.
Now, specific money managers were leading the bulls’ herd. Luminus Management, managed by Jonathan Barrett and Paul Segal, created the most valuable position in Clear Channel Outdoor Holdings, Inc. (NYSE:CCO). Luminus Management had $5.6 million invested in the company at the end of the quarter. Matthew Mark’s Jet Capital Investors also initiated a $4.4 million position during the quarter. The following funds were also among the new CCO investors: Simon Sadler’s Segantii Capital, Benjamin A. Smith’s Laurion Capital Management, and David MacKnight’s One Fin Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Clear Channel Outdoor Holdings, Inc. (NYSE:CCO). We will take a look at FB Financial Corporation (NYSE:FBK), Schweitzer-Mauduit International, Inc. (NYSE:SWM), Stratasys, Ltd. (NASDAQ:SSYS), and Veracyte Inc (NASDAQ:VCYT). This group of stocks’ market valuations resemble CCO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FBK | 7 | 80971 | 3 |
| SWM | 8 | 28250 | -2 |
| SSYS | 13 | 108677 | -3 |
| VCYT | 18 | 102679 | -6 |
| Average | 11.5 | 80144 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $80 million. That figure was $334 million in CCO’s case. Veracyte Inc (NASDAQ:VCYT) is the most popular stock in this table. On the other hand FB Financial Corporation (NYSE:FBK) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately CCO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CCO were disappointed as the stock returned -46.6% so far in 2019 (through 12/23) and trailed 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 65 percent of these stocks already outperformed the market in 2019.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
