At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Teekay Tankers Ltd. (NYSE:TNK).
Teekay Tankers Ltd. (NYSE:TNK) has seen an increase in hedge fund interest of late. Our calculations also showed that TNK isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most market participants, hedge funds are seen as worthless, old investment vehicles of the past. While there are more than 8000 funds trading at present, We choose to focus on the upper echelon of this group, around 850 funds. These hedge fund managers administer bulk of all hedge funds' total asset base, and by shadowing their top stock picks, Insider Monkey has come up with a number of investment strategies that have historically exceeded the broader indices. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_738761" align="aligncenter" width="397"] Fred DiSanto of Ancora Advisors[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a look at the recent hedge fund action encompassing Teekay Tankers Ltd. (NYSE:TNK).
Hedge fund activity in Teekay Tankers Ltd. (NYSE:TNK)
At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in TNK over the last 18 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Teekay Tankers Ltd. (NYSE:TNK), with a stake worth $25.9 million reported as of the end of September. Trailing Renaissance Technologies was Marshall Wace LLP, which amassed a stake valued at $7 million. GLG Partners, Cobalt Capital Management, 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 Cobalt Capital Management allocated the biggest weight to Teekay Tankers Ltd. (NYSE:TNK), around 2.31% of its 13F portfolio. Diametric Capital is also relatively very bullish on the stock, earmarking 1.17 percent of its 13F equity portfolio to TNK.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Teekay Tankers Ltd. (NYSE:TNK) headfirst. MIK Capital, managed by Kamyar Khajavi, established the most outsized position in Teekay Tankers Ltd. (NYSE:TNK). MIK Capital had $2.5 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also initiated a $0.6 million position during the quarter. The following funds were also among the new TNK investors: Frederick DiSanto's Ancora Advisors, Nathaniel August's Mangrove Partners, and Louis Navellier's Navellier & Associates.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Teekay Tankers Ltd. (NYSE:TNK) but similarly valued. These stocks are Oyster Point Pharma, Inc. (NASDAQ:OYST), Phathom Pharmaceuticals, Inc. (NASDAQ:PHAT), Berkshire Hills Bancorp, Inc. (NYSE:BHLB), and National Bank Holdings Corp (NYSE:NBHC). This group of stocks' market valuations match TNK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OYST,4,1827,1 PHAT,6,311386,-1 BHLB,15,23209,6 NBHC,8,47803,-1 Average,8.25,96056,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $67 million in TNK's case. Berkshire Hills Bancorp, Inc. (NYSE:BHLB) is the most popular stock in this table. On the other hand Oyster Point Pharma, Inc. (NASDAQ:OYST) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Teekay Tankers Ltd. (NYSE:TNK) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. Unfortunately TNK wasn't nearly as popular as these 10 stocks and hedge funds that were betting on TNK were disappointed as the stock returned -35.9% during the second quarter (through June 17th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.