The market has been volatile in the last few months as the Federal Reserve finalized its rate cuts and uncertainty looms over trade negotiations with China. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points over the last 12 months. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure since summer months, though some funds increased their exposure dramatically at the end of Q3 and the beginning of Q4. In this article, we analyze what the smart money thinks of Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) and find out how it is affected by hedge funds’ moves.
Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. CCO was in 43 hedge funds’ portfolios at the end of September. There were 32 hedge funds in our database with CCO holdings at the end of the previous quarter. Our calculations also showed that CCO isn’t among the 30 most popular stocks among hedge funds.
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.
Andy Redleaf of Whitebox Advisors
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to go over the recent hedge fund action regarding Clear Channel Outdoor Holdings, Inc. (NYSE:CCO).
How are hedge funds trading Clear Channel Outdoor Holdings, Inc. (NYSE:CCO)?
Heading into the fourth quarter of 2019, a total of 43 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 34% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in CCO a year ago. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, Mason Capital Management was the largest shareholder of Clear Channel Outdoor Holdings, Inc. (NYSE:CCO), with a stake worth $48.8 million reported as of the end of September. Trailing Mason Capital Management was D E Shaw, which amassed a stake valued at $43.8 million. Solus Alternative Asset Management, Marathon Asset Management, and Whitebox Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Marathon Asset Management allocated the biggest weight to Clear Channel Outdoor Holdings, Inc. (NYSE:CCO), around 12.69% of its portfolio. Mason Capital Management is also relatively very bullish on the stock, setting aside 11.9 percent of its 13F equity portfolio to CCO.
Now, key money managers have jumped into Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) headfirst. Luminus Management, managed by Jonathan Barrett and Paul Segal, created the biggest position in Clear Channel Outdoor Holdings, Inc. (NYSE:CCO). Luminus Management had $5.6 million invested in the company at the end of the quarter. Matthew Mark’s Jet Capital Investors also initiated a $4.4 million position during the quarter. The following funds were also among the new CCO investors: Simon Sadler’s Segantii Capital, Benjamin A. Smith’s Laurion Capital Management, and David MacKnight’s One Fin Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) but similarly valued. These stocks are FB Financial Corporation (NYSE:FBK), Schweitzer-Mauduit International, Inc. (NYSE:SWM), Stratasys, Ltd. (NASDAQ:SSYS), and Veracyte Inc (NASDAQ:VCYT). This group of stocks’ market caps match CCO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FBK | 7 | 80971 | 3 |
| SWM | 8 | 28250 | -2 |
| SSYS | 13 | 108677 | -3 |
| VCYT | 18 | 102679 | -6 |
| Average | 11.5 | 80144 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $80 million. That figure was $334 million in CCO’s case. Veracyte Inc (NASDAQ:VCYT) is the most popular stock in this table. On the other hand FB Financial Corporation (NYSE:FBK) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately CCO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CCO were disappointed as the stock returned -6.3% during the fourth quarter (through 11/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
