News Corp (NWSA): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

News Corp (NASDAQ:NWSA) was in 82 hedge funds’ portfolio at the end of March. NWSA shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. There were 74 hedge funds in our database with NWSA holdings at the end of the previous quarter.

To most market participants, hedge funds are viewed as underperforming, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading at the moment, we at Insider Monkey hone in on the upper echelon of this group, around 450 funds. Most estimates calculate that this group oversees the majority of all hedge funds’ total capital, and by keeping an eye on their highest performing investments, we have unsheathed a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 24 percentage points in 7 months (see the details here).

Equally as key, bullish insider trading activity is a second way to break down the investments you’re interested in. Just as you’d expect, there are a variety of reasons for a corporate insider to cut shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the valuable potential of this tactic if piggybackers understand where to look (learn more here).

Consequently, we’re going to take a gander at the latest action surrounding News Corp (NASDAQ:NWSA).

What have hedge funds been doing with News Corp (NASDAQ:NWSA)?

At Q1’s end, a total of 82 of the hedge funds we track held long positions in this stock, a change of 11% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings significantly.

According to our comprehensive database, Donald Yacktman’s Yacktman Asset Management had the largest position in News Corp (NASDAQ:NWSA), worth close to $2.3126 billion, comprising 11.8% of its total 13F portfolio. Coming in second is Chris Hohn of Childrens Investment Fund, with a $782 million position; the fund has 52.1% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Eric Mindich’s Eton Park Capital, Jonathon Jacobson’s Highfields Capital Management and Boykin Curry’s Eagle Capital Management.

As industrywide interest jumped, key money managers were breaking ground themselves. Luxor Capital Group, managed by Christian Leone, assembled the most outsized position in News Corp (NASDAQ:NWSA). Luxor Capital Group had 535.2 million invested in the company at the end of the quarter. James Dinan’s York Capital Management also made a $147.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Christian Leone’s Luxor Capital Group, John Griffin’s Blue Ridge Capital, and David Stemerman’s Conatus Capital Management.

Insider trading activity in News Corp (NASDAQ:NWSA)

Bullish insider trading is at its handiest when the company in focus has experienced transactions within the past half-year. Over the last six-month time period, News Corp (NASDAQ:NWSA) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to News Corp (NASDAQ:NWSA). These stocks are Live Nation Entertainment, Inc. (NYSE:LYV), Starz (NASDAQ:STRZA), The Madison Square Garden Co (NASDAQ:MSG), The Walt Disney Company (NYSE:DIS), and Time Warner Inc (NYSE:TWX). This group of stocks belong to the entertainment – diversified industry and their market caps are similar to NWSA’s market cap.