We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Fox Corporation (NASDAQ:FOXA) based on that data.
Is Fox Corporation (NASDAQ:FOXA) undervalued? Money managers are getting more bullish. The number of long hedge fund positions improved by 1 lately. Our calculations also showed that FOXA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_26423" align="aligncenter" width="400"] Seth Klarman of Baupost Group[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's check out the latest hedge fund action surrounding Fox Corporation (NASDAQ:FOXA).
How are hedge funds trading Fox Corporation (NASDAQ:FOXA)?
At Q1's end, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FOXA over the last 18 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
The largest stake in Fox Corporation (NASDAQ:FOXA) was held by Baupost Group, which reported holding $645.6 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $249 million position. Other investors bullish on the company included Yacktman Asset Management, 3G Sahana Capital Management, and Brahman Capital. In terms of the portfolio weights assigned to each position 3G Sahana Capital Management allocated the biggest weight to Fox Corporation (NASDAQ:FOXA), around 19.93% of its 13F portfolio. Baupost Group is also relatively very bullish on the stock, setting aside 9.53 percent of its 13F equity portfolio to FOXA.
As aggregate interest increased, specific money managers have been driving this bullishness. 3G Sahana Capital Management, managed by Munir Javeri, created the largest position in Fox Corporation (NASDAQ:FOXA). 3G Sahana Capital Management had $130 million invested in the company at the end of the quarter. Brett Barakett's Tremblant Capital also initiated a $48.4 million position during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson's Adage Capital Management, Steven Tananbaum's GoldenTree Asset Management, and Christian Leone's Luxor Capital Group.
Let's go over hedge fund activity in other stocks similar to Fox Corporation (NASDAQ:FOXA). We will take a look at Vulcan Materials Company (NYSE:VMC), Boston Properties, Inc. (NYSE:BXP), Garmin Ltd. (NASDAQ:GRMN), and Conagra Brands, Inc. (NYSE:CAG). All of these stocks' market caps are similar to FOXA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VMC,49,1119317,-3 BXP,29,185266,9 GRMN,27,394058,1 CAG,30,538429,1 Average,33.75,559268,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.75 hedge funds with bullish positions and the average amount invested in these stocks was $559 million. That figure was $1564 million in FOXA's case. Vulcan Materials Company (NYSE:VMC) is the most popular stock in this table. On the other hand Garmin Ltd. (NASDAQ:GRMN) is the least popular one with only 27 bullish hedge fund positions. Fox Corporation (NASDAQ:FOXA) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on FOXA as the stock returned 23.4% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.