Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Tecnoglass Inc. (NASDAQ:TGLS) based on that data.
Is Tecnoglass Inc. (NASDAQ:TGLS) a buy right now? Prominent investors are becoming more confident. The number of long hedge fund positions increased by 3 recently. Our calculations also showed that TGLS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). TGLS was in 8 hedge funds' portfolios at the end of the third quarter of 2019. There were 5 hedge funds in our database with TGLS positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_26073" align="alignnone" width="600"] Jim Simons of Renaissance Technologies[/caption]
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 view the fresh hedge fund action surrounding Tecnoglass Inc. (NASDAQ:TGLS).
What does smart money think about Tecnoglass Inc. (NASDAQ:TGLS)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 60% from the second quarter of 2019. By comparison, 3 hedge funds held shares or bullish call options in TGLS a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
More specifically, Rutabaga Capital Management was the largest shareholder of Tecnoglass Inc. (NASDAQ:TGLS), with a stake worth $6.3 million reported as of the end of September. Trailing Rutabaga Capital Management was Polaris Capital Management, which amassed a stake valued at $3.5 million. Renaissance Technologies, GRT Capital Partners, and SG Capital 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 Rutabaga Capital Management allocated the biggest weight to Tecnoglass Inc. (NASDAQ:TGLS), around 2.22% of its 13F portfolio. GRT Capital Partners is also relatively very bullish on the stock, earmarking 0.23 percent of its 13F equity portfolio to TGLS.
As one would reasonably expect, key hedge funds were leading the bulls' herd. SG Capital Management, managed by Ken Grossman and Glen Schneider, initiated the most valuable position in Tecnoglass Inc. (NASDAQ:TGLS). SG Capital Management had $0.3 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace also initiated a $0.2 million position during the quarter. The only other fund with a brand new TGLS position is Thomas Bailard's Bailard Inc.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Tecnoglass Inc. (NASDAQ:TGLS) but similarly valued. These stocks are Old Second Bancorp Inc. (NASDAQ:OSBC), Ciner Resources LP (NYSE:CINR), Cambridge Bancorp (NASDAQ:CATC), and Dynex Capital Inc (NYSE:DX). This group of stocks' market values resemble TGLS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OSBC,9,32875,-3 CINR,1,5077,0 CATC,4,15228,-1 DX,7,15250,1 Average,5.25,17108,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $12 million in TGLS's case. Old Second Bancorp Inc. (NASDAQ:OSBC) is the most popular stock in this table. On the other hand Ciner Resources LP (NYSE:CINR) is the least popular one with only 1 bullish hedge fund positions. Tecnoglass Inc. (NASDAQ:TGLS) is not the most popular stock in this group but hedge fund interest is still above average. 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 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. Unfortunately TGLS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TGLS were disappointed as the stock returned 0.3% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.