Should You Avoid Media General, Inc. (MEG)?

Media General, Inc. (NYSE:MEG) investors should be aware of a decrease in activity from the world’s largest hedge funds lately.

In the eyes of most traders, hedge funds are seen as worthless, outdated investment tools of years past. While there are over 8000 funds trading today, we choose to focus on the bigwigs of this group, around 450 funds. Most estimates calculate that this group controls the majority of all hedge funds’ total asset base, and by keeping an eye on their best stock picks, we have uncovered a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as key, bullish insider trading sentiment is another way to parse down the stock market universe. There are many incentives for an executive to drop shares of his or her company, but just one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this method if you understand where to look (learn more here).

Keeping this in mind, it’s important to take a look at the latest action surrounding Media General, Inc. (NYSE:MEG).

What does the smart money think about Media General, Inc. (NYSE:MEG)?

Heading into Q2, a total of 5 of the hedge funds we track were bullish in this stock, a change of -29% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings considerably.

When looking at the hedgies we track, Mario Gabelli’s GAMCO Investors had the largest position in Media General, Inc. (NYSE:MEG), worth close to $32.5 million, comprising 0.2% of its total 13F portfolio. The second largest stake is held by Berkshire Hathaway, managed by Warren Buffett, which held a $27.6 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining hedge funds with similar optimism include Chuck Royce’s Royce & Associates, D. E. Shaw’s D E Shaw and Jim Simons’s Renaissance Technologies.

Seeing as Media General, Inc. (NYSE:MEG) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers that elected to cut their entire stakes last quarter. At the top of the heap, Peter Troob’s Troob Capital Management dropped the biggest investment of all the hedgies we monitor, worth about $5.1 million in stock.. Edward A. Mule’s fund, Silver Point Capital, also dropped its stock, about $1.6 million worth. These moves are interesting, as aggregate hedge fund interest fell by 2 funds last quarter.

How have insiders been trading Media General, Inc. (NYSE:MEG)?

Insider buying is at its handiest when the company in question has experienced transactions within the past 180 days. Over the last half-year time frame, Media General, Inc. (NYSE:MEG) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

With the results demonstrated by Insider Monkey’s studies, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and Media General, Inc. (NYSE:MEG) applies perfectly to this mantra.

Click here to learn why you should track hedge funds