It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Entercom Communications Corp. (NYSE:ETM).
Hedge fund interest in Entercom Communications Corp. (NYSE:ETM) shares was flat during the third quarter. This is usually a negative indicator. 10 hedge funds that we track owned the stock on September 30, same as on June 30. At the end of this article we will also compare ETM to other stocks including JinkoSolar Holding Co., Ltd. (NYSE:JKS), Matrix Service Co (NASDAQ:MTRX), and Waterstone Financial, Inc. (NASDAQ:WSBF) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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What does the smart money think about Entercom Communications Corp. (NYSE:ETM)?
Heading into the fourth quarter of 2016, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ETM over the last 5 quarters, which has remained within a narrow range. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Brandon Osten’s Venator Capital Management has the biggest position in Entercom Communications Corp. (NYSE:ETM), worth close to $29 million, accounting for 19.1% of its total 13F portfolio. The second most bullish fund manager is Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital which holds a $2.4 million position. Other members of the smart money that are bullish comprise D E Shaw, one of the biggest hedge funds in the world, Mark Coe’s Coe Capital Management, and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Judging by the fact that Entercom Communications Corp. (NYSE:ETM) has weathered bearish sentiment from hedge fund managers, it’s easy to see that there was a specific group of hedge funds that slashed their positions entirely by the end of the third quarter. Interestingly, Neil Chriss’ Hutchin Hill Capital sold off the largest stake of all the hedgies monitored by Insider Monkey, totaling about $0.3 million in stock, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital was right behind this move, as the fund dumped about $0.1 million worth of shares.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Entercom Communications Corp. (NYSE:ETM) but similarly valued. We will take a look at JinkoSolar Holding Co., Ltd. (NYSE:JKS), Matrix Service Co (NASDAQ:MTRX), Waterstone Financial, Inc. (NASDAQ:WSBF), and Seres Therapeutics Inc (NASDAQ:MCRB). This group of stocks’ market caps are closest to ETM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JKS | 5 | 12522 | 1 |
| MTRX | 15 | 68397 | 4 |
| WSBF | 15 | 84996 | 2 |
| MCRB | 13 | 25183 | -4 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $36 million in ETM’s case. Matrix Service Co (NASDAQ:MTRX) is the most popular stock in this table. On the other hand JinkoSolar Holding Co., Ltd. (NYSE:JKS) is the least popular one with only 5 bullish hedge fund positions. Entercom Communications Corp. (NYSE:ETM) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MTRX might be a better candidate to consider taking a long position in.
Disclosure: None
