Time Warner Inc (TWX): Are Hedge Funds Right About This Stock?
Time Warner Inc (NYSE:TWX) is a stock that has returned 28% since the start of the year, and its price-to-earnings multiple below 17x indicates that things aren't totally out of control even with this appreciation. With that being said, one sect of the market seems to be taking their profits.
If you were to ask many investors, hedge funds are perceived as delayed, outdated financial tools of a period lost to current times. Although there are more than 8,000 hedge funds in operation today, this site focuses on the bigwigs of this club, about 525 funds. It is widely held that this group has its hands on most of all hedge funds' total capital, and by watching their highest performing investments, we've come up with a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Just as necessary, positive insider trading sentiment is a second way to analyze the investments you're interested in. Just as you'd expect, there are a number of stimuli for an executive to drop shares of his or her company, but just one, very clear reason why they would buy. Several academic studies have demonstrated the valuable potential of this tactic if investors understand where to look (learn more here).
Now that that's out of the way, it's important to examine the latest info about Time Warner Inc (NYSE:TWX).
How are hedge funds trading Time Warner Inc (NYSE:TWX)?
At the end of the second quarter, a total of 55 of the hedge funds we track held long positions in this stock, a change of -11% from one quarter earlier. With the smart money's sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes significantly.
Out of the hedge funds we follow, Andreas Halvorsen's Viking Global had the most valuable position in Time Warner Inc (NYSE:TWX), worth close to $1.5329 billion, accounting for 8.5% of its total 13F portfolio. On Viking Global's heels is Philippe Laffont of Coatue Management, with a $686.6 million position; the fund has 7.6% of its 13F portfolio invested in the stock. Other peers that hold long positions include Daniel S. Och's OZ Management, John Griffin's Blue Ridge Capital and John Thaler's JAT Capital Management.
Since Time Warner Inc (NYSE:TWX) has faced dropping sentiment from the smart money's best and brightest, it's easy to see that there is a sect of hedge funds that slashed their entire stakes at the end of the second quarter. At the top of the heap, Alexander Mitchell's Scopus Asset Management cut the largest stake of all the hedgies we watch, totaling close to $93.6 million in call options., and Alexander Mitchell of Scopus Asset Management was right behind this move, as the fund cut about $28.8 million worth. These moves are important to note, as total hedge fund interest dropped by 7 funds at the end of the second quarter.
How are insiders trading Time Warner Inc (NYSE:TWX)?
Insider buying is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the last six-month time frame, Time Warner Inc (NYSE:TWX) has seen 2 unique insiders buying, and 11 insider sales (see the details of insider trades here).
We'll go over the relationship between both of these indicators in other stocks similar to Time Warner Inc (NYSE:TWX). These stocks are Live Nation Entertainment, Inc. (NYSE:LYV), Starz (NASDAQ:STRZA), The Madison Square Garden Co (NASDAQ:MSG), The Walt Disney Company (NYSE:DIS), and News Corp (NASDAQ:NWSA). This group of stocks belong to the entertainment - diversified industry and their market caps match TWX's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Live Nation Entertainment, Inc. (NYSE:LYV)
The Madison Square Garden Co (NASDAQ:MSG)
The Walt Disney Company (NYSE:DIS)
News Corp (NASDAQ:NWSA)
Using the returns explained by Insider Monkey's studies, regular investors should always pay attention to hedge fund and insider trading sentiment, and Time Warner Inc (NYSE:TWX) is an important part of this process.