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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Timkensteel Corp (NYSE:TMST) and determine whether the smart money was really smart about this stock.
Timkensteel Corp (NYSE:TMST) has seen a decrease in hedge fund sentiment recently. TMST was in 11 hedge funds' portfolios at the end of March. There were 12 hedge funds in our database with TMST holdings at the end of the previous quarter. Our calculations also showed that TMST 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.
To the average investor there are plenty of formulas stock traders use to grade publicly traded companies. Some of the most under-the-radar formulas are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the elite investment managers can trounce the S&P 500 by a very impressive margin (see the details here).
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John Overdeck of Two Sigma Advisors[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to take a glance at the fresh hedge fund action encompassing Timkensteel Corp (NYSE:TMST).
Hedge fund activity in Timkensteel Corp (NYSE:TMST)
At the end of the first quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the fourth quarter of 2019. On the other hand, there were a total of 13 hedge funds with a bullish position in TMST a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, GAMCO Investors held the most valuable stake in Timkensteel Corp (NYSE:TMST), which was worth $4.4 million at the end of the third quarter. On the second spot was D E Shaw which amassed $2 million worth of shares. Royce & Associates, Citadel Investment Group, and Two Sigma Advisors 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 GAMCO Investors allocated the biggest weight to Timkensteel Corp (NYSE:TMST), around 0.05% of its 13F portfolio. Beddow Capital Management is also relatively very bullish on the stock, designating 0.05 percent of its 13F equity portfolio to TMST.
Seeing as Timkensteel Corp (NYSE:TMST) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there were a few fund managers who sold off their full holdings last quarter. At the top of the heap, Israel Englander's Millennium Management dropped the biggest investment of the "upper crust" of funds tracked by Insider Monkey, valued at close to $0.6 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund cut about $0.2 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds last quarter.
Let's now take a look at hedge fund activity in other stocks similar to Timkensteel Corp (NYSE:TMST). These stocks are StarTek, Inc. (NYSE:SRT), SWK Holdings Corporation (NASDAQ:SWKH), IDT Corporation (NYSE:IDT), and Rocky Brands, Inc. (NASDAQ:RCKY). This group of stocks' market values are closest to TMST's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SRT,4,3292,0 SWKH,4,116218,4 IDT,10,18102,1 RCKY,9,12139,-3 Average,6.75,37438,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $8 million in TMST's case. IDT Corporation (NYSE:IDT) is the most popular stock in this table. On the other hand StarTek, Inc. (NYSE:SRT) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Timkensteel Corp (NYSE:TMST) 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 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on TMST, though not to the same extent, as the stock returned 20.4% in Q2 and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.