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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is TPI Composites, Inc. (NASDAQ:TPIC), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is TPI Composites, Inc. (NASDAQ:TPIC) ready to rally soon? The smart money was becoming more confident. The number of long hedge fund positions went up by 2 lately. TPI Composites, Inc. (NASDAQ:TPIC) was in 20 hedge funds' portfolios at the end of June. The all time high for this statistic is 27. Our calculations also showed that TPIC isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 18 hedge funds in our database with TPIC holdings at the end of March.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Phillip Gross of Adage Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this under-the-radar stock. We go through lists like the 10 best growth stocks to buy 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. Now we're going to view the new hedge fund action encompassing TPI Composites, Inc. (NASDAQ:TPIC).
Do Hedge Funds Think TPIC Is A Good Stock To Buy Now?
At Q2's end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in TPIC a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Greenvale Capital held the most valuable stake in TPI Composites, Inc. (NASDAQ:TPIC), which was worth $60 million at the end of the second quarter. On the second spot was Caxton Associates LP which amassed $39.9 million worth of shares. Adage Capital Management, Quaero Capital, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Greenvale Capital allocated the biggest weight to TPI Composites, Inc. (NASDAQ:TPIC), around 6.62% of its 13F portfolio. Caxton Associates LP is also relatively very bullish on the stock, setting aside 4.37 percent of its 13F equity portfolio to TPIC.
Consequently, some big names have been driving this bullishness. Greenvale Capital, managed by Bruce Emery, established the most valuable position in TPI Composites, Inc. (NASDAQ:TPIC). Greenvale Capital had $60 million invested in the company at the end of the quarter. Chuck Royce's Royce & Associates also made a $5 million investment in the stock during the quarter. The following funds were also among the new TPIC investors: Robert Charles Gibbins's Autonomy Capital, John Overdeck and David Siegel's Two Sigma Advisors, and Joshua Nash's Ulysses Management.
Let's check out hedge fund activity in other stocks similar to TPI Composites, Inc. (NASDAQ:TPIC). We will take a look at Atea Pharmaceuticals, Inc. (NASDAQ:AVIR), Tri Continental Corporation (NYSE:TY), RadNet Inc. (NASDAQ:RDNT), Avid Technology, Inc. (NASDAQ:AVID), Cal-Maine Foods Inc (NASDAQ:CALM), Easterly Government Properties Inc (NYSE:DEA), and FB Financial Corporation (NYSE:FBK). This group of stocks' market caps match TPIC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AVIR,17,375628,4 TY,3,1268,1 RDNT,17,115529,3 AVID,21,568311,-1 CALM,19,186675,-1 DEA,16,41176,0 FBK,13,70859,3 Average,15.1,194207,1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $194 million. That figure was $161 million in TPIC's case. Avid Technology, Inc. (NASDAQ:AVID) is the most popular stock in this table. On the other hand Tri Continental Corporation (NYSE:TY) is the least popular one with only 3 bullish hedge fund positions. TPI Composites, Inc. (NASDAQ:TPIC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TPIC is 76.4. 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 TPIC wasn't nearly as popular as these 5 stocks and hedge funds that were betting on TPIC were disappointed as the stock returned -32.3% 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.