How do we determine whether Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) a buy here? Money managers are taking an optimistic view. The number of long hedge fund bets moved up by 1 recently. Our calculations also showed that TKC isn't among the 30 most popular stocks among hedge funds. TKC was in 9 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 8 hedge funds in our database with TKC positions at the end of the previous quarter.
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 market by 32 percentage points since May 2014 through March 12, 2019 (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.
Let's analyze the latest hedge fund action encompassing Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC).
How are hedge funds trading Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC)?
Heading into the first quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in TKC 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, D E Shaw held the most valuable stake in Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC), which was worth $6.1 million at the end of the third quarter. On the second spot was Alden Global Capital which amassed $4 million worth of shares. Moreover, Millennium Management, Weld Capital Management, and Driehaus Capital were also bullish on Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, some big names were leading the bulls' herd. Weld Capital Management, managed by Minhua Zhang, established the biggest position in Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC). Weld Capital Management had $1.2 million invested in the company at the end of the quarter. Richard Driehaus's Driehaus Capital also initiated a $0.4 million position during the quarter. The only other fund with a brand new TKC position is Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's check out hedge fund activity in other stocks similar to Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC). We will take a look at Mellanox Technologies, Ltd. (NASDAQ:MLNX), The Hanover Insurance Group, Inc. (NYSE:THG), Hexcel Corporation (NYSE:HXL), and HubSpot Inc (NYSE:HUBS). This group of stocks' market valuations are similar to TKC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MLNX,45,1295298,13 THG,20,368274,2 HXL,23,150545,0 HUBS,22,349232,1 Average,27.5,540837,4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.5 hedge funds with bullish positions and the average amount invested in these stocks was $541 million. That figure was $15 million in TKC's case. Mellanox Technologies, Ltd. (NASDAQ:MLNX) is the most popular stock in this table. On the other hand The Hanover Insurance Group, Inc. (NYSE:THG) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) is even less popular than THG. Hedge funds dodged a bullet by taking a relatively bearish stance towards TKC. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately TKC wasn't nearly as popular as these 15 stock (hedge fund sentiment was very bearish); TKC investors were disappointed as the stock returned -4.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.