Silver Ring Value Partners recently released its Q4 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 26.6% for the last 12 months (net), outperforming its benchmark, the Russell 3000 Index which returned 20.9% in the same period. You should check out Silver Ring Value Partners’ top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q4 2020 Investor Letter, Silver Ring Value Partners’ highlighted a few stocks and Fox Corp (NASDAQ:FOX) is one of them. Fox Corp (NASDAQ:FOX) is a mass media company. In the last three months, Fox Corp (NASDAQ:FOX) stock gained 12.1% and on January 15th it had a closing price of $30.39. Here is what Silver Ring Value Partners’ said:
“I sold our investment in FOX during the quarter at a small loss and redeployed the proceeds into shares of Discovery Communications and Mednax. The main reason for my sale was a new competitive threat, which widened the range of likely company outcomes. Furthermore, it added a competitive threat to the existing threat of secular decline that the industry is already battling to overcome. The probability of being right on having two independent things work out for the company is much lower than of it overcoming just one problem.
Fox Corp gets a substantial majority of its profits from Fox News. This is a network with very inelastic demand which has appeal to the ~45% of the country with conservative political views. With President Trump having lost the election, he began to agitate his supporters to switch viewership to more right-wing news outlets that were being more supportive of him and his claims about the election. Furthermore, there has been talk of him launching or backing a competing network, fracturing the conservative audience.
It’s possible that I am over-reacting and that nothing will come of this threat. Fox has a strong competitive position and has contracts with key on-air talent. However, initial evidence showed a spike in viewership at previously fringe right-wing networks as Trump supporters began to switch in droves away from the (in Trump’s view) insufficiently loyal Fox News network.
I don’t know how this will play out, but investing is not about answering tough questions, but rather about finding easy ones to answer. This would be a tougher decision if the choice were between continuing to own FOX and holding cash. However, I was able to redeploy the proceeds into two investments that were on average equally undervalued without the complexity of a looming competitive threat.”
In Q2 2020, the number of bullish hedge fund positions on Fox Corp (NASDAQ:FOX) stock decreased by about 9% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in Fox’s growth potential. Our calculations showed that Fox Corp (NASDAQ:FOX) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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Disclosure: None. This article is originally published at Insider Monkey.
