How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding The E.W. Scripps Company (NASDAQ:SSP).
Hedge fund interest in The E.W. Scripps Company (NASDAQ:SSP) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare SSP to other stocks including MTS Systems Corporation (NASDAQ:MTSC), Innoviva, Inc. (NASDAQ:INVA), and CTS Corporation (NYSE:CTS) to get a better sense of its popularity.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most shareholders, hedge funds are assumed to be slow, old financial tools of years past. While there are more than 8000 funds in operation at present, We hone in on the masters of this club, approximately 750 funds. These hedge fund managers direct the majority of the smart money’s total asset base, and by keeping an eye on their first-class investments, Insider Monkey has discovered a few investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Jamie Zimmerman of Litespeed Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to view the fresh hedge fund action regarding The E.W. Scripps Company (NASDAQ:SSP).
Hedge fund activity in The E.W. Scripps Company (NASDAQ:SSP)
At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in SSP over the last 17 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, GAMCO Investors held the most valuable stake in The E.W. Scripps Company (NASDAQ:SSP), which was worth $76.5 million at the end of the third quarter. On the second spot was Cove Street Capital which amassed $32.9 million worth of shares. Minerva Advisors, Litespeed Management, and AQR Capital Management 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 Litespeed Management allocated the biggest weight to The E.W. Scripps Company (NASDAQ:SSP), around 8.77% of its 13F portfolio. Cove Street Capital is also relatively very bullish on the stock, setting aside 4.6 percent of its 13F equity portfolio to SSP.
Because The E.W. Scripps Company (NASDAQ:SSP) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few fund managers that decided to sell off their full holdings heading into Q4. Interestingly, Ken Griffin’s Citadel Investment Group sold off the largest investment of the “upper crust” of funds monitored by Insider Monkey, totaling close to $1.9 million in stock. Minhua Zhang’s fund, Weld Capital Management, also sold off its stock, about $1.5 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as The E.W. Scripps Company (NASDAQ:SSP) but similarly valued. These stocks are MTS Systems Corporation (NASDAQ:MTSC), Innoviva, Inc. (NASDAQ:INVA), CTS Corporation (NYSE:CTS), and National Bank Holdings Corp (NYSE:NBHC). This group of stocks’ market caps resemble SSP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTSC | 18 | 120517 | 6 |
| INVA | 24 | 224572 | 1 |
| CTS | 10 | 86136 | 1 |
| NBHC | 11 | 78989 | 1 |
| Average | 15.75 | 127554 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $128 million. That figure was $132 million in SSP’s case. Innoviva, Inc. (NASDAQ:INVA) is the most popular stock in this table. On the other hand CTS Corporation (NYSE:CTS) is the least popular one with only 10 bullish hedge fund positions. The E.W. Scripps Company (NASDAQ:SSP) is not the most popular stock in this group but hedge fund interest is still above average. 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 SSP as the stock returned 12.3% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
