Is MSG Networks Inc (NYSE:MSGN) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
MSG Networks Inc (NYSE:MSGN) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 23 hedge funds’ portfolios at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Shenandoah Telecommunications Company (NASDAQ:SHEN), Brinker International, Inc. (NYSE:EAT), and Euronav NV (NYSE:EURN) to gather more data points.
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 market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a look at the new hedge fund action surrounding MSG Networks Inc (NYSE:MSGN).
What does the smart money think about MSG Networks Inc (NYSE:MSGN)?
Heading into the fourth quarter of 2018, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, no change from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MSGN over the last 13 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Ariel Investments was the largest shareholder of MSG Networks Inc (NYSE:MSGN), with a stake worth $206 million reported as of the end of September. Trailing Ariel Investments was GAMCO Investors, which amassed a stake valued at $52.1 million. Bridger Management, Renaissance Technologies, and Arrowstreet Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Because MSG Networks Inc (NYSE:MSGN) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there exists a select few hedge funds who sold off their entire stakes heading into Q3. Interestingly, Steve Cohen’s Point72 Asset Management said goodbye to the largest stake of the 700 funds monitored by Insider Monkey, comprising about $8.7 million in stock. Peter Muller’s fund, PDT Partners, also dropped its stock, about $3.9 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to MSG Networks Inc (NYSE:MSGN). These stocks are Shenandoah Telecommunications Company (NASDAQ:SHEN), Brinker International, Inc. (NYSE:EAT), Euronav NV (NYSE:EURN), and Hilltop Holdings Inc. (NYSE:HTH). This group of stocks’ market caps resemble MSGN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SHEN | 14 | 72514 | 8 |
| EAT | 26 | 196941 | 6 |
| EURN | 16 | 186535 | -1 |
| HTH | 14 | 136297 | 3 |
| Average | 17.5 | 148072 | 4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $148 million. That figure was $383 million in MSGN’s case. Brinker International, Inc. (NYSE:EAT) is the most popular stock in this table. On the other hand Shenandoah Telecommunications Company (NASDAQ:SHEN) is the least popular one with only 14 bullish hedge fund positions. MSG Networks Inc (NYSE:MSGN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard EAT might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
