Is Meredith Corporation (NYSE:MDP) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Is Meredith Corporation (NYSE:MDP) ready to rally soon? Prominent investors are taking a bearish view. The number of bullish hedge fund bets went down by 5 lately. Our calculations also showed that MDP isn’t among the 30 most popular stocks among hedge funds. MDP was in 12 hedge funds’ portfolios at the end of December. There were 17 hedge funds in our database with MDP holdings at the end of the previous quarter.
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 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to review the key hedge fund action surrounding Meredith Corporation (NYSE:MDP).
How have hedgies been trading Meredith Corporation (NYSE:MDP)?
At Q4’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from the second quarter of 2018. By comparison, 15 hedge funds held shares or bullish call options in MDP a year ago. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Royce & Associates, managed by Chuck Royce, holds the biggest position in Meredith Corporation (NYSE:MDP). Royce & Associates has a $122.5 million position in the stock, comprising 1.1% of its 13F portfolio. The second most bullish fund manager is John W. Rogers of Ariel Investments, with a $75.2 million position; 1% of its 13F portfolio is allocated to the stock. Other peers that are bullish comprise Robert Joseph Caruso’s Select Equity Group, Michael Price’s MFP Investors and Mario Gabelli’s GAMCO Investors.
Since Meredith Corporation (NYSE:MDP) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of hedgies that slashed their entire stakes last quarter. Interestingly, Ken Griffin’s Citadel Investment Group said goodbye to the biggest position of the 700 funds tracked by Insider Monkey, totaling close to $1.4 million in stock. D. E. Shaw’s fund, D E Shaw, also said goodbye to its stock, about $0.9 million worth. These transactions are important to note, as total hedge fund interest fell by 5 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Meredith Corporation (NYSE:MDP) but similarly valued. These stocks are Genworth Financial Inc (NYSE:GNW), Boyd Gaming Corporation (NYSE:BYD), Genomic Health, Inc. (NASDAQ:GHDX), and CNX Resources Corporation (NYSE:CNX). This group of stocks’ market values match MDP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GNW | 22 | 70350 | 0 |
| BYD | 30 | 461140 | -3 |
| GHDX | 24 | 1022530 | 6 |
| CNX | 23 | 747911 | 0 |
| Average | 24.75 | 575483 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $575 million. That figure was $312 million in MDP’s case. Boyd Gaming Corporation (NYSE:BYD) is the most popular stock in this table. On the other hand Genworth Financial Inc (NYSE:GNW) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Meredith Corporation (NYSE:MDP) is even less popular than GNW. Hedge funds dodged a bullet by taking a bearish stance towards MDP. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately MDP wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); MDP investors were disappointed as the stock returned 13.4% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
