Were Hedge Funds Right About The New York Times Company (NYT)?

Is The New York Times Company (NYSE:NYT) 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.

Hedge fund interest in The New York Times Company (NYSE:NYT) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that NYT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare NYT to other stocks including The AZEK Company Inc. (NYSE:AZEK), Woori Financial Group Inc. (NYSE:WF), and People’s United Financial, Inc. (NASDAQ:PBCT) to get a better sense of its popularity.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Ian Wace of Marshall Wace

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining stock. 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. 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. With all of this in mind we’re going to go over the new hedge fund action surrounding The New York Times Company (NYSE:NYT).

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

At second quarter’s end, a total of 48 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 42 hedge funds held shares or bullish call options in NYT a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Darsana Capital Partners was the largest shareholder of The New York Times Company (NYSE:NYT), with a stake worth $410.4 million reported as of the end of June. Trailing Darsana Capital Partners was Farallon Capital, which amassed a stake valued at $288.1 million. OZ Management, Stockbridge Partners, and Renaissance Technologies 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 Anabranch Capital allocated the biggest weight to The New York Times Company (NYSE:NYT), around 20.29% of its 13F portfolio. StackLine Partners is also relatively very bullish on the stock, setting aside 12.19 percent of its 13F equity portfolio to NYT.

Because The New York Times Company (NYSE:NYT) has experienced bearish sentiment from the smart money, logic holds that there exists a select few funds who sold off their full holdings last quarter. It’s worth mentioning that Dan Loeb’s Third Point cut the largest stake of the “upper crust” of funds followed by Insider Monkey, comprising close to $63.8 million in stock, and Brennan Diaz’s Fernbridge Capital Management was right behind this move, as the fund cut about $32.9 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as The New York Times Company (NYSE:NYT) but similarly valued. We will take a look at The AZEK Company Inc. (NYSE:AZEK), Woori Financial Group Inc. (NYSE:WF), People’s United Financial, Inc. (NASDAQ:PBCT), Casey’s General Stores, Inc. (NASDAQ:CASY), Coty Inc (NYSE:COTY), Tenet Healthcare Corp (NYSE:THC), and STAAR Surgical Company (NASDAQ:STAA). This group of stocks’ market values match NYT’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $663 million. That figure was $2225 million in NYT’s case. Tenet Healthcare Corp (NYSE:THC) is the most popular stock in this table. On the other hand Woori Financial Group Inc. (NYSE:WF) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks The New York Times Company (NYSE:NYT) is more popular among hedge funds. Our overall hedge fund sentiment score for NYT is 83.8. 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. 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 returned 29.6% in 2021 through November 5th but still managed to beat the market by 3.1 percentage points. Hedge funds were also right about betting on NYT as the stock returned 15.5% since the end of June (through 11/5) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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