“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Is Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) an excellent stock to buy now? Hedge funds are getting more optimistic. The number of bullish hedge fund positions inched up by 21 in recent months. Our calculations also showed that CCO isn’t among the 30 most popular stocks among hedge funds (see the video below). CCO was in 32 hedge funds’ portfolios at the end of June. There were 11 hedge funds in our database with CCO positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are tons of gauges shareholders put to use to appraise their stock investments. Some of the most innovative gauges are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the top investment managers can outpace the broader indices by a healthy amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s view the fresh hedge fund action surrounding Clear Channel Outdoor Holdings, Inc. (NYSE:CCO).
What have hedge funds been doing with Clear Channel Outdoor Holdings, Inc. (NYSE:CCO)?
At Q2’s end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 191% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CCO over the last 16 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Solus Alternative Asset Management was the largest shareholder of Clear Channel Outdoor Holdings, Inc. (NYSE:CCO), with a stake worth $51.5 million reported as of the end of March. Trailing Solus Alternative Asset Management was Marathon Asset Management, which amassed a stake valued at $51 million. Third Point, D E Shaw, and Strategic Value Partners were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, some big names were leading the bulls’ herd. Solus Alternative Asset Management, managed by Christopher Pucillo, assembled the most valuable position in Clear Channel Outdoor Holdings, Inc. (NYSE:CCO). Solus Alternative Asset Management had $51.5 million invested in the company at the end of the quarter. Bruce J. Richards and Louis Hanover’s Marathon Asset Management also made a $51 million investment in the stock during the quarter. The other funds with brand new CCO positions are Dan Loeb’s Third Point, Victor Khosla’s Strategic Value Partners, and OZ Management.
Let’s check out 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 Suburban Propane Partners LP (NYSE:SPH), Safety Insurance Group, Inc. (NASDAQ:SAFT), Inspire Medical Systems, Inc. (NYSE:INSP), and RPC, Inc. (NYSE:RES). This group of stocks’ market values match CCO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SPH | 4 | 96526 | -1 |
| SAFT | 10 | 47551 | -1 |
| INSP | 19 | 287939 | 1 |
| RES | 16 | 83837 | -4 |
| Average | 12.25 | 128963 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $129 million. That figure was $454 million in CCO’s case. Inspire Medical Systems, Inc. (NYSE:INSP) is the most popular stock in this table. On the other hand Suburban Propane Partners LP (NYSE:SPH) is the least popular one with only 4 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 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 -46.6% during the third quarter 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 many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
