The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Hemisphere Media Group Inc (NASDAQ:HMTV) based on those filings.
Is Hemisphere Media Group (HMTV) a good stock to buy now? Money managers were in a pessimistic mood. The number of bullish hedge fund bets dropped by 2 in recent months. Hemisphere Media Group Inc (NASDAQ:HMTV) was in 6 hedge funds' portfolios at the end of September. The all time high for this statistics is 13. Our calculations also showed that HMTV isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 8 hedge funds in our database with HMTV positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
William Graves Boardman Bay Capital
William Graves of Boardman Bay Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we're going to take a glance at the key hedge fund action encompassing Hemisphere Media Group Inc (NASDAQ:HMTV).
How have hedgies been trading Hemisphere Media Group Inc (NASDAQ:HMTV)?
At third quarter's end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the previous quarter. By comparison, 8 hedge funds held shares or bullish call options in HMTV a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Hemisphere Media Group Inc (NASDAQ:HMTV) was held by Fine Capital Partners, which reported holding $14.7 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $7.9 million position. Other investors bullish on the company included Boardman Bay Capital Management, Winton Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Fine Capital Partners allocated the biggest weight to Hemisphere Media Group Inc (NASDAQ:HMTV), around 3.96% of its 13F portfolio. Boardman Bay Capital Management is also relatively very bullish on the stock, designating 1.29 percent of its 13F equity portfolio to HMTV.
Judging by the fact that Hemisphere Media Group Inc (NASDAQ:HMTV) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there exists a select few hedge funds that decided to sell off their full holdings in the third quarter. It's worth mentioning that John Overdeck and David Siegel's Two Sigma Advisors dropped the largest investment of the 750 funds watched by Insider Monkey, comprising about $0.1 million in stock, and Donald Sussman's Paloma Partners was right behind this move, as the fund dropped about $0.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds in the third quarter.
Let's go over hedge fund activity in other stocks similar to Hemisphere Media Group Inc (NASDAQ:HMTV). These stocks are Luxfer Holdings PLC (NYSE:LXFR), International General Insurance Holdings Ltd. (NASDAQ:IGIC), Comtech Telecommunications Corp. (NASDAQ:CMTL), Cadiz Inc (NASDAQ:CDZI), Experience Investment Corp. (NASDAQ:EXPC), Orchid Island Capital, Inc. (NYSE:ORC), and Osmotica Pharmaceuticals plc (NASDAQ:OSMT). This group of stocks' market values are similar to HMTV's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LXFR,12,71054,1 IGIC,9,11712,0 CMTL,12,36285,-1 CDZI,7,5833,-2 EXPC,19,95338,6 ORC,4,11068,0 OSMT,9,20041,-1 Average,10.3,35904,0.4 [/table]
As you can see these stocks had an average of 10.3 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $25 million in HMTV's case. Experience Investment Corp. (NASDAQ:EXPC) is the most popular stock in this table. On the other hand Orchid Island Capital, Inc. (NYSE:ORC) is the least popular one with only 4 bullish hedge fund positions. Hemisphere Media Group Inc (NASDAQ:HMTV) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HMTV is 23.5. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on HMTV as the stock returned 30.5% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
