Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. With this in mind let’s see whether Tegna Inc (NYSE:TGNA) makes for a good investment at the moment. We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Tegna Inc (NYSE:TGNA) a first-rate investment today? Prominent investors are getting more optimistic. The number of bullish hedge fund bets inched up by 1 in recent months. Our calculations also showed that TGNA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
To most market participants, hedge funds are perceived as slow, outdated investment vehicles of yesteryear. While there are over 8000 funds with their doors open at the moment, We choose to focus on the crème de la crème of this club, around 850 funds. Most estimates calculate that this group of people preside over the majority of the smart money’s total capital, and by keeping an eye on their matchless investments, Insider Monkey has discovered various investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Parag Vora of HG Vora Capital Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a glance at the latest hedge fund action surrounding Tegna Inc (NYSE:TGNA).
Hedge fund activity in Tegna Inc (NYSE:TGNA)
At the end of the fourth quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. On the other hand, there were a total of 22 hedge funds with a bullish position in TGNA a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Cliff Asness’s AQR Capital Management has the largest position in Tegna Inc (NYSE:TGNA), worth close to $122.2 million, accounting for 0.1% of its total 13F portfolio. On AQR Capital Management’s heels is John W. Rogers of Ariel Investments, with a $105.7 million position; 1.3% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions encompass Parag Vora’s HG Vora Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Jeffrey Bronchick’s Cove Street Capital. In terms of the portfolio weights assigned to each position HG Vora Capital Management allocated the biggest weight to Tegna Inc (NYSE:TGNA), around 9.16% of its 13F portfolio. Cove Street Capital is also relatively very bullish on the stock, setting aside 2.1 percent of its 13F equity portfolio to TGNA.
As industrywide interest jumped, some big names have jumped into Tegna Inc (NYSE:TGNA) headfirst. HG Vora Capital Management, managed by Parag Vora, created the largest position in Tegna Inc (NYSE:TGNA). HG Vora Capital Management had $97.6 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also initiated a $2.9 million position during the quarter. The following funds were also among the new TGNA investors: Ray Dalio’s Bridgewater Associates, Phillip Goldstein, Andrew Dakos and Steven Samuels’s Bulldog Investors, and Bruce Kovner’s Caxton Associates LP.
Let’s now take a look at hedge fund activity in other stocks similar to Tegna Inc (NYSE:TGNA). We will take a look at The Goodyear Tire & Rubber Company (NASDAQ:GT), Steven Madden, Ltd. (NASDAQ:SHOO), NorthWestern Corporation (NYSE:NWE), and Aerojet Rocketdyne Holdings Inc (NYSE:AJRD). This group of stocks’ market caps match TGNA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GT | 32 | 573619 | 5 |
| SHOO | 22 | 84910 | 2 |
| NWE | 19 | 167358 | 2 |
| AJRD | 21 | 436849 | 0 |
| Average | 23.5 | 315684 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $316 million. That figure was $400 million in TGNA’s case. The Goodyear Tire & Rubber Company (NASDAQ:GT) is the most popular stock in this table. On the other hand NorthWestern Corporation (NYSE:NWE) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Tegna Inc (NYSE:TGNA) is even less popular than NWE. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but managed to beat the market by 5.5 percentage points. A small number of hedge funds were also right about betting on TGNA, though not to the same extent, as the stock returned -22.8% during the same time period and outperformed the market as well.
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.
