Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Outfront Media Inc (NYSE:OUT) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is Outfront Media Inc (NYSE:OUT) a buy right now? Prominent investors were getting more optimistic. The number of bullish hedge fund positions rose by 4 recently. Outfront Media Inc (NYSE:OUT) was in 35 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 41. Our calculations also showed that OUT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 31 hedge funds in our database with OUT holdings at the end of June.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks 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. Now we’re going to take a look at the new hedge fund action encompassing Outfront Media Inc (NYSE:OUT).
Do Hedge Funds Think OUT Is A Good Stock To Buy Now?
At the end of September, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OUT over the last 25 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Outfront Media Inc (NYSE:OUT), which was worth $96.3 million at the end of the third quarter. On the second spot was P2 Capital Partners which amassed $82 million worth of shares. Hawk Ridge Management, Fir Tree, and EMS Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Nishkama Capital allocated the biggest weight to Outfront Media Inc (NYSE:OUT), around 7.19% of its 13F portfolio. P2 Capital Partners is also relatively very bullish on the stock, earmarking 6.91 percent of its 13F equity portfolio to OUT.
As one would reasonably expect, key hedge funds have jumped into Outfront Media Inc (NYSE:OUT) headfirst. Hidden Lake Asset Management, managed by Kevin Mok, created the largest position in Outfront Media Inc (NYSE:OUT). Hidden Lake Asset Management had $9.7 million invested in the company at the end of the quarter. Steven Boyd’s Armistice Capital also initiated a $4.4 million position during the quarter. The following funds were also among the new OUT investors: Felix Wai’s Zeno Research, Peter Algert’s Algert Global, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Outfront Media Inc (NYSE:OUT). These stocks are Reata Pharmaceuticals, Inc. (NASDAQ:RETA), Allogene Therapeutics, Inc. (NASDAQ:ALLO), Cerence Inc. (NASDAQ:CRNC), Meritage Homes Corp (NYSE:MTH), Six Flags Entertainment Corp (NYSE:SIX), Millicom International Cellular S.A. (NASDAQ:TIGO), and VEON Ltd. (NASDAQ:VEON). This group of stocks’ market valuations are similar to OUT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RETA | 13 | 184435 | -5 |
| ALLO | 21 | 205580 | -5 |
| CRNC | 18 | 105845 | -3 |
| MTH | 27 | 370507 | 7 |
| SIX | 42 | 1046474 | 6 |
| TIGO | 7 | 57120 | 0 |
| VEON | 15 | 81991 | 2 |
| Average | 20.4 | 293136 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $293 million. That figure was $689 million in OUT’s case. Six Flags Entertainment Corp (NYSE:SIX) is the most popular stock in this table. On the other hand Millicom International Cellular S.A. (NASDAQ:TIGO) is the least popular one with only 7 bullish hedge fund positions. Outfront Media Inc (NYSE:OUT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OUT is 74.6. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, OUT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on OUT were disappointed as the stock returned -1% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
