Steel City Capital, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio net return of 0.4% was recorded by the fund for the third quarter of 2021. Year-to-date, the Partnership gained 10.7%, net. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Steel City Capital, in its Q3 2021 investor letter, mentioned News Corporation (NASDAQ: NWSA) and discussed its stance on the firm. News Corporation is a New York, New York-based media and publishing company with a $14.3 billion market capitalization. NWSA delivered a 33.92% return since the beginning of the year, while its 12-month returns are up by 79.19%. The stock closed at $24.16 per share on October 25, 2021.
Here is what Steel City Capital has to say about News Corporation in its Q3 2021 investor letter:
“News Corp (NWSA) closed out its fiscal year ended 6/30/21 on a high note and entered the new year with strong momentum. Revenue at the Move subsidiary (owner of realtor.com) reached an all-time quarterly high, supported by an extremely hot domestic housing market. The Dow Jones group (owner of the WSJ, Barron’s, MarketWatch and Investor’s Business Daily) also reported records for both subscriber count and circulation revenue. Not to be overlooked is Dow Jones’s success in converting advertising sales to its digital platforms; for five consecutive quarters digital advertising revenue exceeded 50% of the advertising mix. Book Publishing continued as a steady contributor in the quarter, pushing full-year EBITDA to ~$300MM, which bested prior highs. And Foxtel (subscriber video service in Australia) has not only stabilized, but reported four consecutive quarters of top-line growth. While I’m not blind to the secular challenges facing this business (cord cutting in favor of OTT offerings), the recent improvement in performance is opening up considerable option value for NWSA’s 65% interest in the asset. Strong across-theboard performance during the year drove free cash flow available to NWSA to $731 million (including REA Group dividends), well above the prior year’s $180 million.”
Photo by Roman Kraft on Unsplash
Based on our calculations, News Corporation (NASDAQ: NWSA) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. NWSA was in 37 hedge fund portfolios at the end of the first half of 2021, compared to 35 funds in the previous quarter. News Corporation (NASDAQ: NWSA) delivered a -2.65% return in the past 3 months.
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
