Hedge Funds Are Dumping Outfront Media Inc (OUT)

It’s a little-known fact that stock performance is not evenly distributed (i.e. you don’t have a 50/50 chance of picking a market-beating stock). In fact, despite the S&P 500 gaining about 5.2% between November 1, 2014 and October 30, 2015, less than 49% of the stocks in the index beat the market during that time. In contrast, the 30 stocks from the index which were the most popular among the investors that we track returned 9.5% during that time and 63% of them beat the market. This shows that while hedge funds get a lot of flak from the mainstream media for their performance, it can be rewarding to follow their moves using the right sets of data. Even then, there is never a fool proof strategy to generating returns, as even the collective wisdom of top hedge funds gets it wrong sometimes, as in the case of some of their top picks from the index like Micron and Anadarko. The data, though, shows that following the collective wisdom of select hedge funds can be a very wise move overall.

Outfront Media Inc (NYSE:OUT) has experienced a decrease in hedge fund sentiment of late. OUT was in 13 hedge funds’ portfolios at the end of the third quarter of 2015. There were 19 hedge funds in our database with OUT positions at the end of the previous quarter. At the end of this article we will also compare OUT to other stocks including Oshkosh Corporation (NYSE:OSK), UIL Holdings Corporation (NYSE:UIL), and CAE, Inc. (USA) (NYSE:CAE) to get a better sense of its popularity.

To the average investor, there are dozens of gauges stock market investors put to use to analyze publicly traded companies. A pair of the most under-the-radar gauges are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the top money managers can outclass their index-focused peers by a significant margin (see the details here).

Now, we’re going to review the recent action encompassing Outfront Media Inc (NYSE:OUT).

How are hedge funds trading Outfront Media Inc (NYSE:OUT)?

At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 32% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, John Paulson’s Paulson & Co has the most valuable position in Outfront Media Inc (NYSE:OUT), worth close to $89.1 million, accounting for 0.5% of its total 13F portfolio. Sitting at the No. 2 spot is D. E. Shaw of D E Shaw, with a $28.3 million position; less than 0.1% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish contain Dmitry Balyasny’s Balyasny Asset Management, Martin D. Sass’s MD Sass and Meridee A. Moore’s Watershed Asset Management.

Judging by the fact that Outfront Media Inc (NYSE:OUT) has faced declining sentiment from the smart money, it’s safe to say that there were a few funds that elected to cut their positions entirely in the third quarter. Interestingly, Ricky Sandler’s Eminence Capital dropped the biggest investment of all the hedgies watched by Insider Monkey, valued at roughly $43.5 million in stock, and Jim Simons’s Renaissance Technologies was right behind this move, as the fund sold off about $3.2 million worth of OUT shares. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 6 funds in the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Outfront Media Inc (NYSE:OUT) but similarly valued. We will take a look at Oshkosh Corporation (NYSE:OSK), UIL Holdings Corporation (NYSE:UIL), CAE, Inc. (USA) (NYSE:CAE), and AU Optronics Corp. (ADR) (NYSE:AUO). All of these stocks’ market caps resemble OUT’s market cap.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $145 million. That figure was $140 million in OUT’s case. Oshkosh Corporation (NYSE:OSK) is the most popular stock in this table, while CAE, Inc. (USA) (NYSE:CAE) and AU Optronics Corp. (ADR) (NYSE:AUO) are the least popular ones with only 6 bullish hedge fund positions. Outfront Media Inc (NYSE:OUT) is not the most popular stock in this group, but hedge fund interest is still above average. While This is a slightly positive signal, we’d rather spend our time researching stocks that hedge funds are piling on. In this regard OSK might be a better candidate to consider a long position.