“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. This article will lay out and discuss the hedge fund and institutional investor sentiment towards The New York Times Company (NYSE:NYT).
The New York Times Company (NYSE:NYT) investors should be aware of a decrease in hedge fund interest lately. Our calculations also showed that NYT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). However, overall hedge fund sentiment towards NYT is still very robust compared to similarly valued stocks.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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.
Jim Simons of Renaissance Technologies
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. Let’s take a gander at the key hedge fund action regarding The New York Times Company (NYSE:NYT).
What have hedge funds been doing with The New York Times Company (NYSE:NYT)?
At the end of the third quarter, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from one quarter earlier. On the other hand, there were a total of 34 hedge funds with a bullish position in NYT a year ago. 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, Darsana Capital Partners was the largest shareholder of The New York Times Company (NYSE:NYT), with a stake worth $299 million reported as of the end of September. Trailing Darsana Capital Partners was Sculptor Capital, which amassed a stake valued at $164.4 million. Renaissance Technologies, Slate Path Capital, and SoMa Equity Partners 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 Darsana Capital Partners allocated the biggest weight to The New York Times Company (NYSE:NYT), around 11.09% of its portfolio. Slate Path Capital is also relatively very bullish on the stock, earmarking 9.59 percent of its 13F equity portfolio to NYT.
Because The New York Times Company (NYSE:NYT) has experienced a decline in interest from hedge fund managers, we can see that there is a sect of money managers who sold off their full holdings by the end of the third quarter. At the top of the heap, Christopher James’s Partner Fund Management cut the biggest stake of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $42.5 million in stock. Joe DiMenna’s fund, ZWEIG DIMENNA PARTNERS, also said goodbye to its stock, about $15.9 million worth. These moves are interesting, as aggregate hedge fund interest fell by 4 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to The New York Times Company (NYSE:NYT). We will take a look at Nexstar Media Group, Inc. (NASDAQ:NXST), Armstrong World Industries, Inc. (NYSE:AWI), Eastgroup Properties Inc (NYSE:EGP), and Black Hills Corporation (NYSE:BKH). This group of stocks’ market values are similar to NYT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NXST | 34 | 1329838 | -6 |
| AWI | 29 | 505278 | -1 |
| EGP | 10 | 24396 | -2 |
| BKH | 19 | 186727 | 3 |
| Average | 23 | 511560 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $512 million. That figure was $1186 million in NYT’s case. Nexstar Media Group, Inc. (NASDAQ:NXST) is the most popular stock in this table. On the other hand Eastgroup Properties Inc (NYSE:EGP) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks The New York Times Company (NYSE:NYT) is more popular among hedge funds. 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. Hedge funds were also right about betting on NYT as the stock returned 13.4% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
