Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Sinclair Broadcast Group, Inc. (NASDAQ:SBGI).
Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) shareholders have witnessed an increase in hedge fund interest recently. Our calculations also showed that SBGI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In today’s marketplace there are a large number of formulas stock market investors have at their disposal to grade their holdings. A couple of the most underrated formulas are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can trounce their index-focused peers by a superb margin (see the details here).
David Brown of Hawk Ridge Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s go over the key hedge fund action surrounding Sinclair Broadcast Group, Inc. (NASDAQ:SBGI).
Hedge fund activity in Sinclair Broadcast Group, Inc. (NASDAQ:SBGI)
At Q4’s end, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the previous quarter. On the other hand, there were a total of 33 hedge funds with a bullish position in SBGI a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies has the most valuable position in Sinclair Broadcast Group, Inc. (NASDAQ:SBGI), worth close to $98.9 million, amounting to 0.1% of its total 13F portfolio. Coming in second is William C. Martin of Raging Capital Management, with a $47.6 million position; 8.3% of its 13F portfolio is allocated to the stock. Some other peers that are bullish contain Cliff Asness’s AQR Capital Management, David Brown’s Hawk Ridge Management and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Beach Point Capital Management allocated the biggest weight to Sinclair Broadcast Group, Inc. (NASDAQ:SBGI), around 11.86% of its 13F portfolio. Raging Capital Management is also relatively very bullish on the stock, dishing out 8.25 percent of its 13F equity portfolio to SBGI.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Hawk Ridge Management, managed by David Brown, initiated the biggest position in Sinclair Broadcast Group, Inc. (NASDAQ:SBGI). Hawk Ridge Management had $33.3 million invested in the company at the end of the quarter. Edward Goodnow’s Goodnow Investment Group also initiated a $17.8 million position during the quarter. The other funds with new positions in the stock are Stephen Mildenhall’s Contrarius Investment Management, Jeffrey Jacobowitz’s Simcoe Capital Management, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) but similarly valued. These stocks are Atlas Corp. (NYSE:SSW), II-VI, Inc. (NASDAQ:IIVI), International Game Technology PLC (NYSE:IGT), and Kennametal Inc. (NYSE:KMT). All of these stocks’ market caps are similar to SBGI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SSW | 15 | 1150151 | 3 |
| IIVI | 18 | 127641 | -14 |
| IGT | 30 | 211118 | 2 |
| KMT | 19 | 267785 | -8 |
| Average | 20.5 | 439174 | -4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $439 million. That figure was $406 million in SBGI’s case. International Game Technology PLC (NYSE:IGT) is the most popular stock in this table. On the other hand Atlas Corp. (NYSE:SSW) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th and still beat the market by 5.5 percentage points. Unfortunately SBGI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SBGI were disappointed as the stock returned -41.3% during the first two and a half months of 2020 (through March 25th) 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 most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
