In this article we will check out the progression of hedge fund sentiment towards News Corp (NASDAQ:NWSA) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is NWSA a good stock to buy? Prominent investors were turning bullish. The number of long hedge fund positions inched up by 7 recently. News Corp (NASDAQ:NWSA) was in 31 hedge funds’ portfolios at the end of September. The all time high for this statistic is 35. Our calculations also showed that NWSA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Donald Yacktman of Yacktman Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to check out the latest hedge fund action surrounding News Corp (NASDAQ:NWSA).
Do Hedge Funds Think NWSA Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in NWSA over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Yacktman Asset Management held the most valuable stake in News Corp (NASDAQ:NWSA), which was worth $304 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $87.3 million worth of shares. Balyasny Asset Management, Arrowstreet Capital, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Solas Capital Management allocated the biggest weight to News Corp (NASDAQ:NWSA), around 8.06% of its 13F portfolio. Yacktman Asset Management is also relatively very bullish on the stock, designating 4.51 percent of its 13F equity portfolio to NWSA.
Consequently, some big names were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the largest position in News Corp (NASDAQ:NWSA). Arrowstreet Capital had $16.2 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $5.3 million investment in the stock during the quarter. The following funds were also among the new NWSA investors: John Overdeck and David Siegel’s Two Sigma Advisors, Jinghua Yan’s TwinBeech Capital, and Simon Sadler’s Segantii Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as News Corp (NASDAQ:NWSA) but similarly valued. We will take a look at Weibo Corp (NASDAQ:WB), Textron Inc. (NYSE:TXT), News Corp (NASDAQ:NWS), Equitable Holdings, Inc. (NYSE:EQH), CyrusOne Inc (NASDAQ:CONE), Cna Financial Corporation (NYSE:CNA), and Westlake Chemical Corporation (NYSE:WLK). This group of stocks’ market caps are similar to NWSA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WB | 13 | 86325 | -1 |
| TXT | 23 | 477867 | -1 |
| NWS | 14 | 39273 | -2 |
| EQH | 36 | 1018604 | -3 |
| CONE | 30 | 342024 | 5 |
| CNA | 17 | 59910 | 5 |
| WLK | 26 | 148658 | -3 |
| Average | 22.7 | 310380 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $310 million. That figure was $485 million in NWSA’s case. Equitable Holdings, Inc. (NYSE:EQH) is the most popular stock in this table. On the other hand Weibo Corp (NASDAQ:WB) is the least popular one with only 13 bullish hedge fund positions. News Corp (NASDAQ:NWSA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NWSA is 75.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on NWSA as the stock returned 23.8% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
