Hedge Funds Are Dumping The E.W. Scripps Company (SSP)

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at The E.W. Scripps Company (NYSE:SSP) from the perspective of those elite funds.

The E.W. Scripps Company (NYSE:SSP) shareholders have witnessed a decrease in support from the world’s most elite money managers of late. SSP was in 9 hedge funds’ portfolios at the end of September. There were 15 hedge funds in our database with SSP holdings at the end of the previous quarter. At the end of this article we will also compare SSP to other stocks, including El Paso Electric Company (NYSE:EE), Colliers International Group Inc (NASDAQ:CIGI), and Eaton Vance Ltd Duration Income Fund (NYSEMKT:EVV) to get a better sense of its popularity.

In the eyes of most shareholders, hedge funds are assumed to be slow, old investment tools of the past. While there are more than an 8000 funds in operation at the moment, Our experts choose to focus on the top tier of this club, around 700 funds. Most estimates calculate that this group of people direct bulk of the smart money’s total capital, and by watching their inimitable picks, Insider Monkey has uncovered a number of investment strategies that have historically outperformed Mr. Market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Keeping this in mind, we’re going to take a glance at the key action regarding The E.W. Scripps Company (NYSE:SSP).

What does the smart money think about The E.W. Scripps Company (NYSE:SSP)?

At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 40% from the second quarter. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, GAMCO Investors, managed by Mario Gabelli, holds the biggest position in The E.W. Scripps Company (NYSE:SSP). The fund has a $101.3 million stake in the company, comprising 0.7% of its 13F portfolio. The second largest stake is held by MSDC Management, managed by Marc Lisker, Glenn Fuhrman and John Phelan, which holds a $16.1 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism consist of Howard Guberman’s Gruss Asset Management, Chuck Royce’s Royce & Associates and Ken Grossman and Glen Schneider’s SG Capital Management.

Because The E.W. Scripps Company (NYSE:SSP) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of hedge funds that slashed their entire stakes last quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the largest stake of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $5.1 million in stock, and Marc Majzner’s Clearline Capital was right behind this move, as the fund dumped about $4.8 million worth of SSP shares. These moves are intriguing to say the least, as total hedge fund interest dropped by 6 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as The E.W. Scripps Company (NYSE:SSP) but similarly valued. We will take a look at El Paso Electric Company (NYSE:EE), Colliers International Group Inc (NASDAQ:CIGI), Eaton Vance Ltd Duration Income Fund (NYSEMKT:EVV), and Interface, Inc. (NASDAQ:TILE). This group of stocks’ market valuations resemble SSP’s market valuation.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $104 million. That figure was $161 million in SSP’s case, a positive sign. Interface, Inc. (NASDAQ:TILE) is the most popular stock in this table. On the other hand Eaton Vance Ltd Duration Income Fund (NYSEMKT:EVV) is the least popular one with only 6 bullish hedge fund positions. The E.W. Scripps Company (NYSE:SSP) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TILE might be a better candidate to consider a long position.