It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 12.1% in the first 5 months of this year (through May 30th). Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 18.7% during the same 5-month period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Grupo Televisa SAB (NYSE:TV).
Grupo Televisa SAB (NYSE:TV) was in 16 hedge funds’ portfolios at the end of March. TV investors should pay attention to an increase in hedge fund interest of late. There were 14 hedge funds in our database with TV holdings at the end of the previous quarter. Our calculations also showed that tv isn’t among the 30 most popular stocks among hedge funds.
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 40 percentage points since May 2014 through May 30, 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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s analyze the fresh hedge fund action regarding Grupo Televisa SAB (NYSE:TV).
What have hedge funds been doing with Grupo Televisa SAB (NYSE:TV)?
At Q1’s end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TV over the last 15 quarters. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Bob Peck and Andy Raab’s FPR Partners has the number one position in Grupo Televisa SAB (NYSE:TV), worth close to $272.5 million, accounting for 6.7% of its total 13F portfolio. The second most bullish fund manager is Michael Larson of Bill & Melinda Gates Foundation Trust, with a $186.7 million position; 0.9% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism include Ken Fisher’s Fisher Asset Management, Jim Simons’s Renaissance Technologies and Jonathon Jacobson’s Highfields Capital Management.
As industrywide interest jumped, some big names were leading the bulls’ herd. Highfields Capital Management, managed by Jonathon Jacobson, created the largest position in Grupo Televisa SAB (NYSE:TV). Highfields Capital Management had $78.4 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $2.4 million position during the quarter. The other funds with new positions in the stock are Benjamin A. Smith’s Laurion Capital Management and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s check out hedge fund activity in other stocks similar to Grupo Televisa SAB (NYSE:TV). These stocks are American Homes 4 Rent (NYSE:AMH), Proofpoint Inc (NASDAQ:PFPT), Dr. Reddy’s Laboratories Limited (NYSE:RDY), and Israel Chemicals Ltd. (NYSE:ICL). This group of stocks’ market caps resemble TV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMH | 19 | 462109 | 1 |
| PFPT | 33 | 659720 | 6 |
| RDY | 11 | 91252 | 1 |
| ICL | 4 | 54026 | -1 |
| Average | 16.75 | 316777 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $317 million. That figure was $890 million in TV’s case. Proofpoint Inc (NASDAQ:PFPT) is the most popular stock in this table. On the other hand Israel Chemicals Ltd. (NYSE:ICL) is the least popular one with only 4 bullish hedge fund positions. Grupo Televisa SAB (NYSE:TV) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately TV wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TV investors were disappointed as the stock returned -16.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
