This Metric Says You Are Smart to Sell News Corp (NWSA)

Is it smart to sell News Corp (NASDAQ:NWSA), a stock that has been essentially flat since the start of the year?

In the 21st century investor’s toolkit, there are tons of indicators investors can use to track publicly traded companies. A couple of the best are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform the broader indices by a healthy margin (see just how much).

Just as key, optimistic insider trading activity is a second way to analyze the financial markets. There are a variety of reasons for an insider to downsize shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the useful potential of this strategy if shareholders know where to look (learn more here).

Furthermore, it’s important to analyze the recent info for News Corp (NASDAQ:NWSA).

How are hedge funds trading News Corp (NASDAQ:NWSA)?

In preparation for the third quarter, a total of 72 of the hedge funds we track were long in this stock, a change of -12% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly.

According to our 13F database, Donald Yacktman’s Yacktman Asset Management had the most valuable position in News Corp (NASDAQ:NWSA), worth close to $2.3567 billion, comprising 11.1% of its total 13F portfolio. Coming in second is Childrens Investment Fund, managed by Chris Hohn, which held a $826.8 million position; 47.4% of its 13F portfolio is allocated to the stock. Other peers that hold long positions include Boykin Curry’s Eagle Capital Management, John Armitage’s Egerton Capital Limited and Christian Leone’s Luxor Capital Group.

As News Corp (NASDAQ:NWSA) has faced a fall in interest from the top-tier hedge fund industry, we can see that there were a few fund managers that decided to sell off their positions entirely last quarter. Intriguingly, Donald Yacktman’s Yacktman Asset Management cut the biggest position of the 450+ funds we track, comprising close to $2312.6 million in stock. Cliff Asness’s fund, AQR Capital Management, also cut its stock, about $146.8 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 10 funds last quarter.

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

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

We’ll also review the relationship between both of these indicators 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). All of these stocks are in the entertainment – diversified industry and their market caps match NWSA’s market cap.