Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 37.6% in 2019 (through the end of November) and outperformed the broader market benchmark by 9.9 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Grupo Televisa SAB (NYSE:TV) has seen a decrease in support from the world’s most elite money managers recently. Our calculations also showed that TV isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? 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.
Jonathon Jacobson of Highfields Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds‘ buy/sell signals. Let’s go over the fresh hedge fund action surrounding Grupo Televisa SAB (NYSE:TV).
What does smart money think about Grupo Televisa SAB (NYSE:TV)?
Heading into the fourth quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards TV over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Bob Peck and Andy Raab’s FPR Partners has the biggest position in Grupo Televisa SAB (NYSE:TV), worth close to $383 million, comprising 8.8% of its total 13F portfolio. Sitting at the No. 2 spot is Bill & Melinda Gates Foundation Trust, led by Michael Larson, holding a $165.1 million position; 0.8% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish consist of Renaissance Technologies, Jonathon Jacobson’s Highfields Capital Management and Barry Dargan’s Intermede Investment Partners. In terms of the portfolio weights assigned to each position Highfields Capital Management allocated the biggest weight to Grupo Televisa SAB (NYSE:TV), around 94.86% of its 13F portfolio. FPR Partners is also relatively very bullish on the stock, designating 8.75 percent of its 13F equity portfolio to TV.
Because Grupo Televisa SAB (NYSE:TV) has faced falling interest from the aggregate hedge fund industry, we can see that there was a specific group of hedge funds who sold off their positions entirely by the end of the third quarter. It’s worth mentioning that Scott Bessent’s Key Square Capital Management dropped the biggest position of the 750 funds followed by Insider Monkey, totaling close to $34.5 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace was right behind this move, as the fund sold off about $12 million worth. These transactions are interesting, as total hedge fund interest dropped by 4 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Grupo Televisa SAB (NYSE:TV) but similarly valued. These stocks are The Scotts Miracle-Gro Company (NYSE:SMG), Harley-Davidson, Inc. (NYSE:HOG), BOK Financial Corporation (NASDAQ:BOKF), and MDU Resources Group Inc (NYSE:MDU). This group of stocks’ market valuations are similar to TV’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SMG | 30 | 413760 | 6 |
| HOG | 18 | 20463 | 4 |
| BOKF | 16 | 189307 | -3 |
| MDU | 21 | 378844 | 0 |
| Average | 21.25 | 250594 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $251 million. That figure was $826 million in TV’s case. The Scotts Miracle-Gro Company (NYSE:SMG) is the most popular stock in this table. On the other hand BOK Financial Corporation (NASDAQ:BOKF) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Grupo Televisa SAB (NYSE:TV) is even less popular than BOKF. Hedge funds clearly dropped the ball on TV as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on TV as the stock returned 12.2% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
