Gray Television, Inc. (GTN) Fell Out Of Favor With Hedge Funds

·6 min read

We at Insider Monkey have gone over 873 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 June 30th. In this article, we look at what those funds think of Gray Television, Inc. (NYSE:GTN) based on that data.

Gray Television, Inc. (NYSE:GTN) has experienced a decrease in activity from the world's largest hedge funds lately. Gray Television, Inc. (NYSE:GTN) was in 20 hedge funds' portfolios at the end of June. The all time high for this statistic is 29. Our calculations also showed that GTN isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Daniel Gold QVT Financial
Daniel Gold QVT Financial

Daniel Gold of QVT Financial

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. With all of this in mind let's go over the key hedge fund action regarding Gray Television, Inc. (NYSE:GTN).

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

At the end of the second quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GTN over the last 24 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Gray Television, Inc. (NYSE:GTN) was held by Darsana Capital Partners, which reported holding $35 million worth of stock at the end of June. It was followed by Arrowstreet Capital with a $13.4 million position. Other investors bullish on the company included Balyasny Asset Management, GAMCO Investors, and QVT Financial. In terms of the portfolio weights assigned to each position Cumberland Associates / Springowl Associates allocated the biggest weight to Gray Television, Inc. (NYSE:GTN), around 4.29% of its 13F portfolio. Sound Point Capital is also relatively very bullish on the stock, dishing out 1.8 percent of its 13F equity portfolio to GTN.

Since Gray Television, Inc. (NYSE:GTN) has witnessed falling interest from hedge fund managers, it's easy to see that there is a sect of money managers who were dropping their entire stakes heading into Q3. Interestingly, D. E. Shaw's D E Shaw said goodbye to the largest stake of all the hedgies monitored by Insider Monkey, worth close to $3.5 million in stock. Stephen Mildenhall's fund, Contrarius Investment Management, also dumped its stock, about $2.4 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 5 funds heading into Q3.

Let's check out hedge fund activity in other stocks similar to Gray Television, Inc. (NYSE:GTN). We will take a look at Silicon Motion Technology Corp. (NASDAQ:SIMO), Urban Edge Properties (NYSE:UE), Aeva Technologies, Inc. (NYSE:AEVA), Apollo Commercial Real Est. Finance Inc (NYSE:ARI), Black Stone Minerals LP (NYSE:BSM), Sumo Logic, Inc. (NASDAQ:SUMO), and Flagstar Bancorp Inc (NYSE:FBC). This group of stocks' market caps are closest to GTN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SIMO,20,492206,-4 UE,16,110060,4 AEVA,15,413023,-1 ARI,9,15385,-2 BSM,6,21854,1 SUMO,13,146343,-1 FBC,25,268235,-3 Average,14.9,209587,-0.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.9 hedge funds with bullish positions and the average amount invested in these stocks was $210 million. That figure was $102 million in GTN's case. Flagstar Bancorp Inc (NYSE:FBC) is the most popular stock in this table. On the other hand Black Stone Minerals LP (NYSE:BSM) is the least popular one with only 6 bullish hedge fund positions. Gray Television, Inc. (NYSE:GTN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GTN is 57.5. 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. 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately GTN wasn't nearly as popular as these 5 stocks and hedge funds that were betting on GTN were disappointed as the stock returned -0.1% since the end of June (through 10/22) 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 many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.

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