The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought The New York Times Company (NYSE:NYT) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is The New York Times Company (NYSE:NYT) a buy right now? The best stock pickers were taking an optimistic view. The number of bullish hedge fund positions moved up by 9 in recent months. The New York Times Company (NYSE:NYT) was in 42 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 41. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that NYT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: 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 a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Now we’re going to take a glance at the latest hedge fund action surrounding The New York Times Company (NYSE:NYT).
How are hedge funds trading The New York Times Company (NYSE:NYT)?
At Q2’s end, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from the previous quarter. By comparison, 41 hedge funds held shares or bullish call options in NYT a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Anand Desai’s Darsana Capital Partners has the most valuable position in The New York Times Company (NYSE:NYT), worth close to $378.3 million, corresponding to 22.4% of its total 13F portfolio. Coming in second is Renaissance Technologies, which holds a $250.2 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish include Gil Simon’s SoMa Equity Partners, Farallon Capital and David Greenspan’s Slate Path Capital. In terms of the portfolio weights assigned to each position Darsana Capital Partners allocated the biggest weight to The New York Times Company (NYSE:NYT), around 22.42% of its 13F portfolio. StackLine Partners is also relatively very bullish on the stock, designating 10.73 percent of its 13F equity portfolio to NYT.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Farallon Capital, initiated the most outsized position in The New York Times Company (NYSE:NYT). Farallon Capital had $173.9 million invested in the company at the end of the quarter. William Duhamel’s Route One Investment Company also initiated a $78.7 million position during the quarter. The following funds were also among the new NYT investors: David S. Winter and David J. Millstone’s 40 North Management, Daniel Sundheim’s D1 Capital Partners, and Thyra Zerhusen’s Fairpointe Capital.
Let’s also examine hedge fund activity in other stocks similar to The New York Times Company (NYSE:NYT). These stocks are Aspen Technology, Inc. (NASDAQ:AZPN), Alleghany Corporation (NYSE:Y), News Corp (NASDAQ:NWSA), Genpact Limited (NYSE:G), Vereit Inc (NYSE:VER), Service Corporation International (NYSE:SCI), and Howmet Aerospace Inc. (NYSE:HWM). This group of stocks’ market values resemble NYT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AZPN | 28 | 878045 | 8 |
| Y | 31 | 270939 | 6 |
| NWSA | 24 | 342184 | -4 |
| G | 29 | 319870 | -5 |
| VER | 23 | 491001 | 5 |
| SCI | 27 | 524384 | -3 |
| HWM | 30 | 2360525 | 5 |
| Average | 27.4 | 740993 | 1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $741 million. That figure was $1853 million in NYT’s case. Alleghany Corporation (NYSE:Y) is the most popular stock in this table. On the other hand Vereit Inc (NYSE:VER) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks The New York Times Company (NYSE:NYT) is more popular among hedge funds. Our overall hedge fund sentiment score for NYT is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Unfortunately NYT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on NYT were disappointed as the stock returned 3.2% since the end of the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
