Discovery Communications Inc. (NASDAQ:DISCA) was in 16 hedge funds’ portfolio at the end of the first quarter of 2013. DISCA has seen a decrease in hedge fund interest of late. There were 17 hedge funds in our database with DISCA holdings at the end of the previous quarter.
To most investors, hedge funds are perceived as unimportant, old financial vehicles of years past. While there are over 8000 funds with their doors open at present, we look at the elite of this club, close to 450 funds. Most estimates calculate that this group has its hands on most of the hedge fund industry’s total asset base, and by keeping an eye on their highest performing stock picks, we have found a few investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as key, positive insider trading sentiment is another way to break down the world of equities. There are plenty of motivations for a corporate insider to drop shares of his or her company, but only one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the valuable potential of this strategy if you know where to look (learn more here).
Keeping this in mind, it’s important to take a look at the key action surrounding Discovery Communications Inc. (NASDAQ:DISCA).
What does the smart money think about Discovery Communications Inc. (NASDAQ:DISCA)?
At the end of the first quarter, a total of 16 of the hedge funds we track were bullish in this stock, a change of -6% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially.
When looking at the hedgies we track, Mario Gabelli’s GAMCO Investors had the biggest position in Discovery Communications Inc. (NASDAQ:DISCA), worth close to $47.9 million, comprising 0.3% of its total 13F portfolio. The second largest stake is held by Alexander Mitchell of Scopus Asset Management, with a $40.2 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include David Harding’s Winton Capital Management, Pasco Alfaro / Richard Tumure’s Miura Global Management and Ken Fisher’s Fisher Asset Management.
Since Discovery Communications Inc. (NASDAQ:DISCA) has experienced falling interest from the aggregate hedge fund industry, logic holds that there were a few hedge funds that decided to sell off their full holdings heading into Q2. It’s worth mentioning that David Gallo’s Valinor Management LLC said goodbye to the biggest position of the 450+ funds we watch, comprising an estimated $24.5 million in stock.. Murray Stahl’s fund, Horizon Asset Management, also dropped its stock, about $18.1 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 1 funds heading into Q2.
What have insiders been doing with Discovery Communications Inc. (NASDAQ:DISCA)?
Insider purchases made by high-level executives is particularly usable when the primary stock in question has seen transactions within the past six months. Over the last six-month time period, Discovery Communications Inc. (NASDAQ:DISCA) has experienced 1 unique insiders buying, and 5 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Discovery Communications Inc. (NASDAQ:DISCA). These stocks are Viacom, Inc. (NASDAQ:VIAB), Time Warner Cable Inc (NYSE:TWC), Virgin Media Inc. (NASDAQ:VMED), DISH Network Corp. (NASDAQ:DISH), and Liberty Global Inc. (NASDAQ:LBTYA). All of these stocks are in the catv systems industry and their market caps are similar to DISCA’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Viacom, Inc. (NASDAQ:VIAB) | 49 | 0 | 0 |
| Time Warner Cable Inc (NYSE:TWC) | 37 | 0 | 9 |
| Virgin Media Inc. (NASDAQ:VMED) | 59 | 0 | 9 |
| DISH Network Corp. (NASDAQ:DISH) | 39 | 0 | 11 |
| Liberty Global Inc. (NASDAQ:LBTYA) | 75 | 0 | 0 |
With the returns exhibited by Insider Monkey’s studies, retail investors should always monitor hedge fund and insider trading sentiment, and Discovery Communications Inc. (NASDAQ:DISCA) applies perfectly to this mantra.
