The third-quarter stock market correction has turned out to resemble the situation observed during the Asian financial crisis of 1997. The two relatively short-lived corrections occurred at a time with stable interest rates, falling commodity markets, with strong-performing technology and healthcare sectors, and struggling energy sector. Similarly, the two corrections followed long periods without a correction, which had to come sooner or later and it did. Even so, several prominent hedge fund investors publicly asserted their bearish view on the current state of the U.S. equity markets, suggesting that they significantly cut their exposure to equities during the latest quarter. Having said that, it would be worthwhile to take a look at the hedge fund sentiment on News Corp (NASDAQ:NWSA) in order to identify whether reputable and successful top money managers continue to believe in its potential.
News Corp (NASDAQ:NWSA) has seen a decrease in hedge fund interest lately. At the end of this article we will also compare NWSA to other stocks including AGL Resources Inc. (NYSE:GAS), Gildan Activewear Inc (USA) (NYSE:GIL), and Comerica Incorporated (NYSE:CMA) to get a better sense of its popularity.
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To most stock holders, hedge funds are viewed as unimportant, outdated investment tools of yesteryear. While there are more than 8000 funds in operation today, We look at the leaders of this group, about 700 funds. It is estimated that this group of investors orchestrate the lion’s share of the smart money’s total asset base, and by observing their top picks, Insider Monkey has formulated several investment strategies that have historically outrun the market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Keeping this in mind, let’s go over the fresh action regarding News Corp (NASDAQ:NWSA).
What does the smart money think about News Corp (NASDAQ:NWSA)?
At the end of the third quarter, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the largest position in News Corp (NASDAQ:NWSA). Pzena Investment Management has a $378.5 million position in the stock, comprising 2.4% of its 13F portfolio. The second most bullish fund manager is International Value Advisers, led by Charles de Vaulx, holding a $269.3 million position; 7.2% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism contain Jonathon Jacobson’s Highfields Capital Management, Michael Blitzer’s Kingstown Capital Management and Craig C. Albert’s Sheffield Asset Management.
Because News Corp (NASDAQ:NWSA) has faced declining sentiment from the aggregate hedge fund industry, we can see that there were a few fund managers that elected to cut their positions entirely heading into Q4. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dropped the biggest stake of the “upper crust” of funds watched by Insider Monkey, worth close to $28.6 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund cut about $10 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 4 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as News Corp (NASDAQ:NWSA) but similarly valued. These stocks are AGL Resources Inc. (NYSE:GAS), Gildan Activewear Inc (USA) (NYSE:GIL), Comerica Incorporated (NYSE:CMA), and Santander Consumer USA Holdings Inc (NYSE:SC). This group of stocks’ market values resemble NWSA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GAS | 30 | 528324 | 2 |
| GIL | 19 | 203148 | 8 |
| CMA | 40 | 745881 | 1 |
| SC | 35 | 1044651 | 0 |
As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $631 million. That figure was $1127 million in NWSA’s case. Comerica Incorporated (NYSE:CMA) is the most popular stock in this table. On the other hand Gildan Activewear Inc (USA) (NYSE:GIL) is the least popular one with only 19 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CMA might be a better candidate to consider a long position.
