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 March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Townsquare Media Inc (NYSE:TSQ) based on those filings.
Townsquare Media Inc (NYSE:TSQ) investors should be aware of a decrease in support from the world's most elite money managers in recent months. TSQ was in 7 hedge funds' portfolios at the end of March. There were 9 hedge funds in our database with TSQ positions at the end of the previous quarter. Our calculations also showed that TSQ 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades 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. Keeping this in mind let's take a glance at the fresh hedge fund action encompassing Townsquare Media Inc (NYSE:TSQ).
Hedge fund activity in Townsquare Media Inc (NYSE:TSQ)
Heading into the second quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards TSQ over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Is TSQ A Good Stock To Buy?
The largest stake in Townsquare Media Inc (NYSE:TSQ) was held by MSD Capital, which reported holding $7.5 million worth of stock at the end of September. It was followed by Oaktree Capital Management with a $7.4 million position. Other investors bullish on the company included Renaissance Technologies, GAMCO Investors, and Millennium Management. In terms of the portfolio weights assigned to each position MSD Capital allocated the biggest weight to Townsquare Media Inc (NYSE:TSQ), around 25.93% of its 13F portfolio. Oaktree Capital Management is also relatively very bullish on the stock, designating 0.21 percent of its 13F equity portfolio to TSQ.
Because Townsquare Media Inc (NYSE:TSQ) has experienced declining sentiment from hedge fund managers, logic holds that there was a specific group of funds that slashed their full holdings in the first quarter. It's worth mentioning that Michael Gelband's ExodusPoint Capital sold off the biggest investment of all the hedgies monitored by Insider Monkey, valued at close to $0.2 million in stock. David Nguyen and Nancy Oh's fund, One68 Global Capital, also dropped its stock, about $0.2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 2 funds in the first quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Townsquare Media Inc (NYSE:TSQ) but similarly valued. These stocks are HMN Financial, Inc. (NASDAQ:HMNF), China Customer Relations Centers, Inc. (NASDAQ:CCRC), Precision Drilling Corp (NYSE:PDS), and Evolution Petroleum Corporation (NYSE:EPM). All of these stocks' market caps are closest to TSQ's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HMNF,4,22411,0 CCRC,1,110,-1 PDS,6,2762,-5 EPM,9,8240,-2 Average,5,8381,-2 [/table]
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $19 million in TSQ's case. Evolution Petroleum Corporation (NYSE:EPM) is the most popular stock in this table. On the other hand China Customer Relations Centers, Inc. (NASDAQ:CCRC) is the least popular one with only 1 bullish hedge fund positions. Townsquare Media Inc (NYSE:TSQ) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 13.9% in 2020 through June 10th but beat the market by 14.2 percentage points. Unfortunately TSQ wasn't nearly as popular as these 10 stocks and hedge funds that were betting on TSQ were disappointed as the stock returned 21.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
