Is The New York Times Company (NYT) A Good Stock To Buy?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in The New York Times Company (NYSE:NYT)? The smart money sentiment can provide an answer to this question.

Is NYT a good stock to buy now? The smart money was taking a bearish view. The number of bullish hedge fund positions were cut by 2 recently. The New York Times Company (NYSE:NYT) was in 48 hedge funds’ portfolios at the end of March. The all time high for this statistic is 50. Our calculations also showed that NYT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are numerous gauges market participants use to analyze publicly traded companies. A couple of the less known gauges are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the top investment managers can outclass the market by a solid margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Gil Simon of SoMa Equity Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 homepage. Keeping this in mind let’s take a glance at the key hedge fund action surrounding The New York Times Company (NYSE:NYT).

Do Hedge Funds Think NYT Is A Good Stock To Buy Now?

At first quarter’s end, a total of 48 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. By comparison, 33 hedge funds held shares or bullish call options in NYT a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Among these funds, Darsana Capital Partners held the most valuable stake in The New York Times Company (NYSE:NYT), which was worth $506.2 million at the end of the fourth quarter. On the second spot was OZ Management which amassed $249 million worth of shares. Route One Investment Company, Renaissance Technologies, and SoMa Equity Partners 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 Anabranch Capital allocated the biggest weight to The New York Times Company (NYSE:NYT), around 24.51% of its 13F portfolio. Darsana Capital Partners is also relatively very bullish on the stock, dishing out 14.15 percent of its 13F equity portfolio to NYT.

Seeing as The New York Times Company (NYSE:NYT) has faced bearish sentiment from hedge fund managers, we can see that there were a few funds who were dropping their positions entirely heading into Q2. At the top of the heap, David S. Winter and David J. Millstone’s 40 North Management dropped the largest investment of all the hedgies monitored by Insider Monkey, valued at close to $89.3 million in stock, and Stanley Druckenmiller’s Duquesne Capital was right behind this move, as the fund sold off about $26.6 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 2 funds heading into Q2.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as The New York Times Company (NYSE:NYT) but similarly valued. These stocks are Ciena Corporation (NYSE:CIEN), US Foods Holding Corp. (NYSE:USFD), Marathon Oil Corporation (NYSE:MRO), Kinross Gold Corporation (NYSE:KGC), Gold Fields Limited (NYSE:GFI), Hyatt Hotels Corporation (NYSE:H), and Juniper Networks, Inc. (NYSE:JNPR). This group of stocks’ market values match NYT’s market value.

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As you can see these stocks had an average of 27.1 hedge funds with bullish positions and the average amount invested in these stocks was $570 million. That figure was $2400 million in NYT’s case. US Foods Holding Corp. (NYSE:USFD) is the most popular stock in this table. On the other hand Gold Fields Limited (NYSE:GFI) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks The New York Times Company (NYSE:NYT) is more popular among hedge funds. Our overall hedge fund sentiment score for NYT is 81.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Unfortunately NYT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NYT were disappointed as the stock returned -19% since the end of the first quarter (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.