Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Fox Corporation (NASDAQ:FOX), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Hedge fund interest in Fox Corporation (NASDAQ:FOX) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that FOX isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as ZoomInfo Technologies Inc. (NASDAQ:ZI), Logitech International SA (NASDAQ:LOGI), and FirstEnergy Corp. (NYSE:FE) to gather more data points.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Donald Yacktman of Yacktman Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium 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. Keeping this in mind we're going to review the new hedge fund action surrounding Fox Corporation (NASDAQ:FOX).
Do Hedge Funds Think FOX Is A Good Stock To Buy Now?
At the end of June, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in FOX over the last 24 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Yacktman Asset Management held the most valuable stake in Fox Corporation (NASDAQ:FOX), which was worth $303.2 million at the end of the second quarter. On the second spot was CQS Cayman LP which amassed $43.8 million worth of shares. Arrowstreet Capital, D E Shaw, and GAMCO Investors 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 Hunting Hill Global Capital allocated the biggest weight to Fox Corporation (NASDAQ:FOX), around 3.84% of its 13F portfolio. Yacktman Asset Management is also relatively very bullish on the stock, dishing out 2.94 percent of its 13F equity portfolio to FOX.
Due to the fact that Fox Corporation (NASDAQ:FOX) has faced falling interest from the aggregate hedge fund industry, we can see that there was a specific group of fund managers who sold off their entire stakes heading into Q3. Interestingly, Seth Klarman's Baupost Group dropped the biggest stake of the 750 funds watched by Insider Monkey, worth an estimated $198.4 million in stock. Munir Javeri's fund, 3G Sahana Capital Management, also cut its stock, about $29.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Fox Corporation (NASDAQ:FOX) but similarly valued. These stocks are ZoomInfo Technologies Inc. (NASDAQ:ZI), Logitech International SA (NASDAQ:LOGI), FirstEnergy Corp. (NYSE:FE), PG&E Corporation (NYSE:PCG), SK Telecom Co., Ltd. (NYSE:SKM), Seagate Technology Holdings plc (NASDAQ:STX), and KeyCorp (NYSE:KEY). This group of stocks' market caps are similar to FOX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZI,35,670224,11 LOGI,20,526968,5 FE,36,1704357,-15 PCG,64,4663822,-1 SKM,8,68342,0 STX,31,1919802,4 KEY,40,443140,-1 Average,33.4,1428094,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.4 hedge funds with bullish positions and the average amount invested in these stocks was $1428 million. That figure was $590 million in FOX's case. PG&E Corporation (NYSE:PCG) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (NYSE:SKM) is the least popular one with only 8 bullish hedge fund positions. Fox Corporation (NASDAQ:FOX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FOX is 35.5. 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 gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on FOX as the stock returned 13.1% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.