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Hedge Funds Have Never Been More Bullish On TIM Participacoes SA (TSU)

Nina Todic

Is TIM Participacoes SA (NYSE:TSU) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

TIM Participacoes SA (NYSE:TSU) was in 16 hedge funds' portfolios at the end of March. TSU has experienced an increase in activity from the world's largest hedge funds in recent months. There were 14 hedge funds in our database with TSU positions at the end of the previous quarter. Our calculations also showed that tsu isn't among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Steven Tananbaum - GoldenTree Asset Management

Let's take a look at the fresh hedge fund action surrounding TIM Participacoes SA (NYSE:TSU).

Hedge fund activity in TIM Participacoes SA (NYSE:TSU)

Heading into the second quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TSU over the last 15 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with TSU Positions

Among these funds, AQR Capital Management held the most valuable stake in TIM Participacoes SA (NYSE:TSU), which was worth $113 million at the end of the first quarter. On the second spot was Paulson & Co which amassed $75.4 million worth of shares. Moreover, Renaissance Technologies, GoldenTree Asset Management, and Citadel Investment Group were also bullish on TIM Participacoes SA (NYSE:TSU), allocating a large percentage of their portfolios to this stock.

Now, key money managers have been driving this bullishness. D E Shaw, managed by D. E. Shaw, established the most valuable position in TIM Participacoes SA (NYSE:TSU). D E Shaw had $2.8 million invested in the company at the end of the quarter. Benjamin A. Smith's Laurion Capital Management also initiated a $1.5 million position during the quarter. The only other fund with a brand new TSU position is Roy Vermus and Shlomi Bracha's Noked Capital.

Let's go over hedge fund activity in other stocks similar to TIM Participacoes SA (NYSE:TSU). These stocks are Voya Financial Inc (NYSE:VOYA), AMERCO (NASDAQ:UHAL), Aramark (NYSE:ARMK), and News Corp (NASDAQ:NWSA). This group of stocks' market caps are closest to TSU's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VOYA,45,1331987,7 UHAL,12,390787,5 ARMK,38,853818,-1 NWSA,21,517519,-2 Average,29,773528,2.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $774 million. That figure was $342 million in TSU's case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table. On the other hand AMERCO (NASDAQ:UHAL) is the least popular one with only 12 bullish hedge fund positions. TIM Participacoes SA (NYSE:TSU) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately TSU wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TSU investors were disappointed as the stock returned -1.2% during the same time period 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 13 of these stocks already outperformed the market so far in Q2.

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

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