Sinclair Broadcast Group, Inc. (SBGI): Are Hedge Funds Right About This Stock?

Is Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) has experienced an increase in support from the world’s most elite money managers lately. Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) was in 20 hedge funds’ portfolios at the end of June. The all time high for this statistic is 47. Our calculations also showed that SBGI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the eyes of most investors, hedge funds are perceived as slow, old investment tools of the past. While there are greater than 8000 funds with their doors open at present, Our experts choose to focus on the crème de la crème of this club, approximately 850 funds. These hedge fund managers command the majority of all hedge funds’ total asset base, and by following their first-class stock picks, Insider Monkey has discovered numerous investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this under-the-radar stock. We go through lists like the 10 best growth stocks to buy to pick the next Tesla that will deliver a 10x return. 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 we’re going to go over the recent hedge fund action surrounding Sinclair Broadcast Group, Inc. (NASDAQ:SBGI).

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

At Q2’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in SBGI a year ago. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

The largest stake in Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) was held by HG Vora Capital Management, which reported holding $157.8 million worth of stock at the end of June. It was followed by Contrarius Investment Management with a $120.5 million position. Other investors bullish on the company included GAMCO Investors, Arrowstreet Capital, and Empyrean Capital Partners. In terms of the portfolio weights assigned to each position HG Vora Capital Management allocated the biggest weight to Sinclair Broadcast Group, Inc. (NASDAQ:SBGI), around 7.12% of its 13F portfolio. Contrarius Investment Management is also relatively very bullish on the stock, earmarking 5.86 percent of its 13F equity portfolio to SBGI.

Now, specific money managers have been driving this bullishness. Empyrean Capital Partners, managed by Michael A. Price and Amos Meron, assembled the most valuable position in Sinclair Broadcast Group, Inc. (NASDAQ:SBGI). Empyrean Capital Partners had $25.5 million invested in the company at the end of the quarter. Felix Wai’s Zeno Research also initiated a $1.9 million position during the quarter. The following funds were also among the new SBGI investors: Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital), Renaissance Technologies, and Greg Eisner’s Engineers Gate Manager.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) but similarly valued. These stocks are Fluor Corporation (NYSE:FLR), Verra Mobility Corporation (NASDAQ:VRRM), Independent Bank Corp (NASDAQ:INDB), Sally Beauty Holdings, Inc. (NYSE:SBH), Niu Technologies (NASDAQ:NIU), Gibraltar Industries Inc (NASDAQ:ROCK), and Instil Bio, Inc. (NASDAQ:TIL). This group of stocks’ market valuations are similar to SBGI’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.6 hedge funds with bullish positions and the average amount invested in these stocks was $220 million. That figure was $485 million in SBGI’s case. Fluor Corporation (NYSE:FLR) is the most popular stock in this table. On the other hand Independent Bank Corp (NASDAQ:INDB) is the least popular one with only 13 bullish hedge fund positions. Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SBGI is 57.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately SBGI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SBGI were disappointed as the stock returned -13.7% since the end of June (through 10/22) 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 many of these stocks already outperformed the market since 2019.

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

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