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Hedge Funds Are Betting On TIM Participacoes SA (TSU)

Nina Todic

Does TIM Participacoes SA (NYSE:TSU) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.

TIM Participacoes SA (NYSE:TSU) investors should pay attention to an increase in activity from the world's largest hedge funds recently. Our calculations also showed that TSU isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In the financial world there are dozens of gauges investors put to use to grade publicly traded companies. Some of the less utilized gauges are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the best money managers can outclass the market by a significant amount (see the details here).

[caption id="attachment_25305" align="aligncenter" width="450"] John Paulson of Paulson & Co[/caption]

PAULSON & CO

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's take a look at the fresh hedge fund action encompassing TIM Participacoes SA (NYSE:TSU).

How are hedge funds trading TIM Participacoes SA (NYSE:TSU)?

At Q3's end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the second quarter of 2019. By comparison, 16 hedge funds held shares or bullish call options in TSU a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, AQR Capital Management held the most valuable stake in TIM Participacoes SA (NYSE:TSU), which was worth $119.8 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $58.6 million worth of shares. Paulson & Co, GoldenTree Asset Management, and NWI Management 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 GoldenTree Asset Management allocated the biggest weight to TIM Participacoes SA (NYSE:TSU), around 4.77% of its 13F portfolio. Moon Capital is also relatively very bullish on the stock, setting aside 2.29 percent of its 13F equity portfolio to TSU.

As industrywide interest jumped, key hedge funds have jumped into TIM Participacoes SA (NYSE:TSU) headfirst. Laurion Capital Management, managed by Benjamin A. Smith, established the largest position in TIM Participacoes SA (NYSE:TSU). Laurion Capital Management had $0.7 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also initiated a $0.5 million position during the quarter. The only other fund with a new position in the stock is Michael Gelband's ExodusPoint Capital.

Let's now review hedge fund activity in other stocks similar to TIM Participacoes SA (NYSE:TSU). These stocks are Ceridian HCM Holding Inc. (NYSE:CDAY), Autoliv Inc. (NYSE:ALV), Molina Healthcare, Inc. (NYSE:MOH), and Owens Corning (NYSE:OC). This group of stocks' market valuations match TSU's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CDAY,28,1115679,6 ALV,14,627166,1 MOH,25,1040324,-7 OC,40,1305624,6 Average,26.75,1022198,1.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $1022 million. That figure was $291 million in TSU's case. Owens Corning (NYSE:OC) is the most popular stock in this table. On the other hand Autoliv Inc. (NYSE:ALV) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks TIM Participacoes SA (NYSE:TSU) is even less popular than ALV. Hedge funds clearly dropped the ball on TSU as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on TSU as the stock returned 14% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.

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

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