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

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded The New York Times Company (NYSE:NYT) and determine whether the smart money was really smart about this stock.

The New York Times Company (NYSE:NYT) was in 45 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 50. NYT investors should pay attention to a decrease in enthusiasm from smart money recently. There were 48 hedge funds in our database with NYT holdings at the end of June. Our calculations also showed that NYT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. With all of this in mind let’s analyze the new hedge fund action encompassing The New York Times Company (NYSE:NYT).

Bruce Kovner of Caxton Associates LP

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

At Q3’s end, a total of 45 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. By comparison, 45 hedge funds held shares or bullish call options in NYT a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Darsana Capital Partners, managed by Anand Desai, holds the biggest position in The New York Times Company (NYSE:NYT). Darsana Capital Partners has a $418.8 million position in the stock, comprising 13.8% of its 13F portfolio. Coming in second is Farallon Capital, with a $400.9 million position; 2% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish contain Jimmy Levin’s Sculptor Capital, Sharlyn C. Heslam’s Stockbridge Partners and Daniel Sundheim’s D1 Capital Partners. 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 21.5% of its 13F portfolio. Darsana Capital Partners is also relatively very bullish on the stock, dishing out 13.8 percent of its 13F equity portfolio to NYT.

Due to the fact that The New York Times Company (NYSE:NYT) has faced falling interest from the entirety of the hedge funds we track, logic holds that there exists a select few money managers who were dropping their entire stakes last quarter. It’s worth mentioning that Gil Simon’s SoMa Equity Partners cut the biggest position of all the hedgies watched by Insider Monkey, totaling about $117.6 million in stock, and Michael Rockefeller and KarláKroeker’s Woodline Partners was right behind this move, as the fund said goodbye to about $4 million worth. These moves are interesting, as total hedge fund interest was cut by 3 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to The New York Times Company (NYSE:NYT). These stocks are Huaneng Power International Inc (NYSE:HNP), Vistra Corp. (NYSE:VST), Berry Global Group Inc (NYSE:BERY), Aspen Technology, Inc. (NASDAQ:AZPN), Zynga Inc (NASDAQ:ZNGA), The Western Union Company (NYSE:WU), and Sealed Air Corporation (NYSE:SEE). All of these stocks’ market caps are similar to NYT’s market cap.

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As you can see these stocks had an average of 30.4 hedge funds with bullish positions and the average amount invested in these stocks was $651 million. That figure was $2431 million in NYT’s case. Zynga Inc (NASDAQ:ZNGA) is the most popular stock in this table. On the other hand Huaneng Power International Inc (NYSE:HNP) is the least popular one with only 4 bullish hedge fund positions. The New York Times Company (NYSE:NYT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NYT is 71.7. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, NYT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NYT were disappointed as the stock returned -18.5% 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.