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"It's Nuts!" Hedgies Hammered Amid Media Massacre

Tyler Durden's picture




 

“People are shooting first and asking questions later...this indiscriminate selling, to me, is just nuts," exclaims on billion-dollar AUM hedge fund CIO as media stocks faced a bloodbath this week. Small (illiquid) doors and large crowds do not mix well as Bloomberg reports, hedge funds own an average 9.7% of the 15 companies in the S&P Media Index - which has tumbled over 8% in 2 days - its biggest loss since 2008. Exuberant return chasing on merger speculation has reversed into panic-selling as Disney, Time Warner Inc., Fox, CBS and Comcast Corp. erased almost $50 billion of value in two days.

 

 

The love affair between hedge funds and media stocks is being tested. As Bloomberg reports, hedge funds have been near-constant champions of the industry, drawn in by its high cash generation and buybacks, takeover speculation and the straight-up momentum of the stocks themselves. This week’s retreat represents the sharpest rebuke to that thesis -- and one of its only setbacks in a bull market well into its seventh year.

“A lot of these funds are speculating on deals, they’re investors playing the spread and not fundamentals,” said Alpha Theory Advisors president Benjamin Dunn, who acts as adviser to hedge funds with about $6 billion in assets. “A few of these names are down big today and you got some pile-on effect with the smaller ones as well.”

 

Hedge funds own an average 9.7 percent of the 15 companies in the gauge, according to data compiled by Bloomberg. That’s a bigger stake than in any of the other 23 industry groups within the S&P 500. The positions largely reflect merger speculation, said Dunn, who is based in Crested Butte, Colorado.

 

...

 

Disappointing results from Walt Disney Co. after the close of trading Tuesday sparked the rout. Selling spread to other television and publishing companies as quarterly reports from CBS Corp. to 21st Century Fox Inc. and Viacom Inc. were marked by shrinking U.S. ad sales and profits propped up by stock buybacks. Viacom fell 14 percent Thursday, its biggest drop since October 2008, while Fox slid 6.4 percent.

 

Until Tuesday, media shares were the best-performing stocks of the bull market, rising 531 percent to eclipse automakers, retail stores and banks. The industry’s market capitalization was about $650 billion, compared with $135 billion in March 2009.

 

That value is evaporating. In just five stocks -- Disney, Time Warner Inc., Fox, CBS and Comcast Corp. -- almost $50 billion of value has been erased in two days.

“It’s been a rough few days,” said Walter Todd, who oversees about $1.1 billion as chief investment officer for Greenwood Capital Associates

Charts: Bloomberg

 

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Fri, 08/07/2015 - 13:53 | 6401925 Headbanger
Headbanger's picture

Yeah no shit cause there's no ad revenue when the advertisers are losing revenue on poor retail sales.

Good news is CNBC will finally get cancelled!

Fri, 08/07/2015 - 13:55 | 6401943 FireBrander
FireBrander's picture

"$50 Billion in 2 days"....From "thin-air", to "thin-air".

Fri, 08/07/2015 - 13:57 | 6401951 Headbanger
Headbanger's picture

To "Off The Air"

Fri, 08/07/2015 - 14:01 | 6401967 knukles
knukles's picture

Quit picking on us hedgies.  It's like picking on Brittany!

https://www.youtube.com/watch?t=49&v=kHmvkRoEowc

Fri, 08/07/2015 - 14:09 | 6401994 Buckaroo Banzai
Buckaroo Banzai's picture

Donald Trump leading any other Republican candidate by at least a 3-1 margin despite the media throwing everything AND the kitchen sink at him is the bell that got rung at the top for the MSM propaganda shít clowns.

It's going to be glorious watching these assholes eat shit and die.

Fri, 08/07/2015 - 14:23 | 6402028 FireBrander
FireBrander's picture

"Donald Trump leading"...yeah, but there are 17 candidates dividing up the pie...where does Trump stand with only 4 candidates in the race?

I predict he will not be in first place...he will huff, and puff, and blame...pick up his marbles and leave...run as an Independent...and give the win to the Democrats...just watch...

He threatened the Republican Leadership with his hand up last night for an Independent run...in effect, he said...either I'm the candidate, or I give the win to the Demcrats...it's your choice.

VP or Cabinet position in store?...lol...NO WAY...Trump will never settle for anything less than the top spot...R's are so screwed here...he's blowing the party apart and the damage will be long term..many are too stupid to see it....Trump is the head of the new "cut off your nose to spite your face" Republican Party...

Fri, 08/07/2015 - 14:27 | 6402058 Clockwork Orange
Clockwork Orange's picture

And that after he basically bombed.

He may not go the distance but another round or two with the lead will be quite enjoyable to watch.  Even better if he hands the baton up to Carly who could pick up the non-establishment business mantel along with the female crown ... sans Hitlery's criminal record.

Fri, 08/07/2015 - 14:29 | 6402067 FireBrander
FireBrander's picture

Ronald Raven is rolling over in his grave.

Fri, 08/07/2015 - 15:43 | 6402255 Squid Viscous
Squid Viscous's picture

Quoth the Raven nevermore...

Fri, 08/07/2015 - 14:32 | 6402074 FireBrander
FireBrander's picture

R's and D's need the votes of everyone in their camp PLUS the majority of I voters in order to win.

If Trump leaves, he takes way too many R's with him...no way can the R candidate win, nor can Trump win...the D wins by default.

Hillary is pretty universally hated though...which makes that "default" win a little more dicey...it's a political ClusterFuck.

Fri, 08/07/2015 - 14:59 | 6402154 Zen Master
Zen Master's picture

Now that is some funny shit right there!

Fri, 08/07/2015 - 14:47 | 6401987 ebworthen
ebworthen's picture

Precisely!  FED funny money to juice Wall Street turns out to be phony money, ether.

A speculative Ponzi casino using public debt and the money of anyone lucky enough to "save for retirement" for profit skimming.

*cough*

Fri, 08/07/2015 - 14:00 | 6401963 Yen Cross
Yen Cross's picture

  Not as long as the airport waiting rooms remain open.

Fri, 08/07/2015 - 14:02 | 6401972 knukles
knukles's picture

Or that babe Missy Tittyclevage sticks around.

He said stick.  Huh hu huuh hu

Fri, 08/07/2015 - 14:06 | 6401984 ajax
ajax's picture

 

 

The Jon Stewart effect? That was quick...

Fri, 08/07/2015 - 13:52 | 6401926 LawsofPhysics
LawsofPhysics's picture

LOL!!!  Talking about "value" in the absence of price discovery is a fool's errand.

fuck all the useless paper-pushers.

Fri, 08/07/2015 - 13:56 | 6401948 NotApplicable
NotApplicable's picture

Not only that, but price never equals value, as all valuations are subjective.

Fri, 08/07/2015 - 13:57 | 6401952 KnuckleDragger-X
KnuckleDragger-X's picture

"Value" is part of the magical incantation so the sheep will give them money. Too bad panic overcomes the effect, and this is just the 'coming attractions". The main feature will be much more exciting.....

Fri, 08/07/2015 - 13:52 | 6401928 farmboy
farmboy's picture

it s nuts to play

Fri, 08/07/2015 - 13:52 | 6401930 lehmen_sisters
lehmen_sisters's picture

What are all the unemployed doing if they aren't watching all the shit box shows on television? One would think media would be booming. 

Fri, 08/07/2015 - 13:56 | 6401949 Headbanger
Headbanger's picture

You just answered your own question.

Fri, 08/07/2015 - 14:03 | 6401974 knukles
knukles's picture

Betcha that porn viewership is "Up". 

Fri, 08/07/2015 - 13:59 | 6401960 NotApplicable
NotApplicable's picture

The unemployed don't have any money left to purchase all of the advertised goods and services, so companies don't gain any revenue by "investing" in advertising.

Perhaps fedgov can create a new bureau in order to be the advertiser of last resort?

Fri, 08/07/2015 - 14:08 | 6401990 Antifaschistische
Antifaschistische's picture

the advertiser of last resort usually starts with "HAVE YOU BEEN INJURED IN CAR ACCIDENT WITH A TRUCK!!" or "HAVE YOU, OR A DEAD LOVED ONE SUFFERED FROM MESOTHELIOMA!!"

Fri, 08/07/2015 - 14:15 | 6402006 Rainman
Rainman's picture

Personal favorite : Did you know dry eyes is a disease ? ,,,, hahaha

Fri, 08/07/2015 - 15:16 | 6402201 Taffy Lewis
Taffy Lewis's picture

I like the one that offers help for being in trouble with payday loans.

Fri, 08/07/2015 - 16:21 | 6402378 deadelephant
deadelephant's picture

...or the one about all the problems caused by vaginal mesh.  Fun for the whole family.

Fri, 08/07/2015 - 18:49 | 6402757 trulz4lulz
trulz4lulz's picture

+1 for vaginal mesh commercial reference.

Fri, 08/07/2015 - 14:27 | 6402060 FireBrander
FireBrander's picture

Companies would, and do, do better by investing in politicians than advertising...although it does fail at times...look at GARDASIL...went over like a lead balloon with parents...so the Pharms bought off Rick Perry and he tried to overrule the parents...FAIL!

Fri, 08/07/2015 - 13:57 | 6401933 JC-BI
JC-BI's picture

The reasons people are selling are because:

1) No confidence in the rigged market

2) no confidence in the dollar that's been devaluated by the privately-owned and corrupt FED. See the ORIGINS of the FED here:

https://biblicisminstitute.wordpress.com/2015/07/28/how-the-ashkenazi-je...

3) Unemployment is high and people need money

4) Warmongering is scaring the hell out of them

Fri, 08/07/2015 - 15:14 | 6402193 FireBrander
FireBrander's picture

"The reasons people are selling"...wrongo right there...people are not selling, computers/HFT's are selling. The "people" put thier trust in institutions to "manage" their money...the "institutions" HFT each other....it's financial war...the sell side is currently winning a few battles..."Past results do not guarentee future returns".

Fri, 08/07/2015 - 13:54 | 6401935 JustObserving
JustObserving's picture

Worthless free and fair media are finally starting to reflect their true value

Fri, 08/07/2015 - 13:55 | 6401944 Spivmeister
Spivmeister's picture

“People are shooting first and asking questions later...this indiscriminate selling, to me, is just nuts,"

Sounds like something Goebbles would have said.

I wish I was paid for talking crap.


Fri, 08/07/2015 - 14:00 | 6401966 NotApplicable
NotApplicable's picture

Thing is, if you're not a psychopath, an imbecile (or both), the cognitive dissonance talking crap creates will eat you alive.

Fri, 08/07/2015 - 13:56 | 6401946 TheRideNeverEnds
TheRideNeverEnds's picture

you are still safe in FB, AMZN and NFLX at all time highs, dont worry, buy more now its cheaper today!

Fri, 08/07/2015 - 13:58 | 6401956 Yen Cross
Yen Cross's picture

    Quote of the week. "Small (illiquid) doors and large crowds do not mix well." 

 Too bad it was plagiarized from the Tylers. ;-)

   I hope all the bond traders that think they will be able to squeeze through the event horizon, are taking heed.

Fri, 08/07/2015 - 14:06 | 6401985 Winston Churchill
Winston Churchill's picture

Isn't a door, its an open elevator shaft.

Who bought the dip ?

Own up.

Fri, 08/07/2015 - 14:31 | 6402070 saints51
saints51's picture

I am waiting to see if Goldman is about to in crude. It may take a few more days.

Fri, 08/07/2015 - 14:47 | 6402108 Lumberjack
Lumberjack's picture

I know someone who owns CVX. Their broker called about 4 days ago and said that stock did very well. Seeing the chart myself after the fact, I had more questions than answers. 

My question is, how did that happen??? This is a serious question and the reason why I do not play the market. I am sure some novice players might learn from this too.

Fri, 08/07/2015 - 15:09 | 6402182 saints51
saints51's picture

Maybe they were short since last year? Maybe they have bought after 2008 and are still holding which would still be up on each share?

Fri, 08/07/2015 - 15:38 | 6402263 Muppet
Muppet's picture

Or the broker is emphasizing the dividend and telling him to ignore the share price as though its unrelated.

Fri, 08/07/2015 - 15:49 | 6402291 saints51
saints51's picture

That too. Lots of different variables possible without seeing statements.

Fri, 08/07/2015 - 14:00 | 6401964 madcows
madcows's picture

It's only digital money.  You only "lost" 50 million if you didn't sell it at the top and convert that to REAL money, Like physical Assets.  Land, PM's, food, etc...

A share in a company is meaningless if you aren't the one running it.

Fri, 08/07/2015 - 14:08 | 6401991 AbbeBrel
AbbeBrel's picture

the quote from above:

“A lot of these funds are speculating on deals, they’re investors playing the spread and not fundamentals”

Wow I haven't seen Hide nor Hair of FUN-D-MENTAL since she retired and left to live on some Brazilian beach and eat molten cheese snacks and made-to-order tropical drinks from wandering vendors. And they have been getting cheaper every day, thanks to the EM currency crash.

Seems to me that was about 2012, about the time the Buffett indicator zoomed over 1SD line above the mean:

http://www.advisorperspectives.com/dshort/updates/Market-Cap-to-GDP.php

Fri, 08/07/2015 - 14:11 | 6401998 tarabel
tarabel's picture

 

 

People are shooting first and asking questions later...this indiscriminate selling, to me, is just nuts, exclaims one billion-dollar AUM hedge fund CIO as media stocks faced a bloodbath this week.

Gee, I wonder which side of the trade he is on.

Fri, 08/07/2015 - 14:53 | 6402131 T-888
T-888's picture

Time Warner CEO Jeff Bewkes, said in November 2012:

He argues that “cord cutting” is overstated and that the phenomenon is limited to a small segment of low income Americans.

 

LOLZ LOLZ It ain't the broke Americans any more you wenius!!!

 

Fri, 08/07/2015 - 15:25 | 6402233 Jack Burton
Jack Burton's picture

Given the bad real economy, and given the massive Fed generated run up in all assets, except commodities, why wouldn't people look to cash in Huge Profits now, and not worry about the world's obvious slide into financial chaos. Even IF, things keep limping along, if you get out with these big run ups, you are a winner. Let the suckers stick it out for another couple % in profits, that is their gamble.

Fri, 08/07/2015 - 17:07 | 6402472 Angry Plant
Angry Plant's picture

The amount of money these companies can make is limited to the the amount of money being spent by advertising and subscription fee's to there service. 

 

Total amount of revenue is fixed.

Total amount of viewers is fixed. 

Total time viewers have to spend is fixed.

Total amount of media content is growing exponentially.

People looking at zerohedge are people that ten years ago would have likely been reading a local newspaper instead. People looking at facebook would have been watching Oprah. People watching others play video games on twitch would have been watching sitcoms. People watch youtube would have been listening to music on CDs and reading magazines.

There is currently massive amounts of ether unmonetized or poorly monetized content out there. Eventually advertisers will figure out that they're being scammed by the status quo that is channeling there resources to a limmited number of content sources instead of other cheaper sources able to produce the same impact for lower costs.

Once this happens total advertising spend will likely be reduced as lower cost sources replace existing higher cost ones. Subscription models will come under assault by lower cost free substitutes.

In other words get ready for both media and social media to completely collapse revenue wise within the next five years. 

Fri, 08/07/2015 - 19:30 | 6402877 Bazza McKenzie
Bazza McKenzie's picture

This is all Trump's doing, since he started being mean to their talking heads.

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