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In this article we will analyze whether Teck Resources Ltd (NYSE:TECK) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is Teck Resources Ltd (NYSE:TECK) going to take off soon? The smart money was becoming less confident. The number of bullish hedge fund positions shrunk by 1 lately. Teck Resources Ltd (NYSE:TECK) was in 30 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 41. Our calculations also showed that TECK isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
According to most traders, hedge funds are assumed to be underperforming, outdated financial vehicles of yesteryear. While there are over 8000 funds in operation today, Our researchers look at the elite of this club, about 850 funds. These money managers administer most of all hedge funds' total capital, and by keeping an eye on their best stock picks, Insider Monkey has figured out several investment strategies that have historically exceeded Mr. Market. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Harold Levy of Iridian Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we're going to take a gander at the fresh hedge fund action surrounding Teck Resources Ltd (NYSE:TECK).
Do Hedge Funds Think TECK Is A Good Stock To Buy Now?
At the end of March, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in TECK a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the biggest position in Teck Resources Ltd (NYSE:TECK). Arrowstreet Capital has a $179.4 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Contrarius Investment Management, led by Stephen Mildenhall, holding a $151.6 million position; 8.6% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism consist of David Cohen and Harold Levy's Iridian Asset Management, Jacob Mitchell's Antipodes Partners and Stanley Druckenmiller's Duquesne Capital. In terms of the portfolio weights assigned to each position Contrarius Investment Management allocated the biggest weight to Teck Resources Ltd (NYSE:TECK), around 8.57% of its 13F portfolio. Castle Hook Partners is also relatively very bullish on the stock, earmarking 6.77 percent of its 13F equity portfolio to TECK.
Seeing as Teck Resources Ltd (NYSE:TECK) has faced declining sentiment from the aggregate hedge fund industry, logic holds that there is a sect of funds that slashed their full holdings heading into Q2. Intriguingly, Steve Cohen's Point72 Asset Management sold off the largest stake of the "upper crust" of funds watched by Insider Monkey, totaling about $12.3 million in stock. Ken Heebner's fund, Capital Growth Management, also sold off its stock, about $11.8 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 1 funds heading into Q2.
Let's now take a look at hedge fund activity in other stocks similar to Teck Resources Ltd (NYSE:TECK). These stocks are Watsco Inc (NYSE:WSO), Cleveland-Cliffs Inc (NYSE:CLF), Dolby Laboratories, Inc. (NYSE:DLB), Aegon N.V. (NYSE:AEG), Comerica Incorporated (NYSE:CMA), Floor & Decor Holdings, Inc. (NYSE:FND), and Elastic N.V. (NYSE:ESTC). This group of stocks' market caps match TECK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WSO,22,280163,-2 CLF,36,968204,9 DLB,34,783499,3 AEG,6,26294,2 CMA,32,704137,-6 FND,38,1100201,7 ESTC,52,1884446,3 Average,31.4,820992,2.3 [/table]
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As you can see these stocks had an average of 31.4 hedge funds with bullish positions and the average amount invested in these stocks was $821 million. That figure was $1072 million in TECK's case. Elastic N.V. (NYSE:ESTC) is the most popular stock in this table. On the other hand Aegon N.V. (NYSE:AEG) is the least popular one with only 6 bullish hedge fund positions. Teck Resources Ltd (NYSE:TECK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TECK is 52. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. A small number of hedge funds were also right about betting on TECK as the stock returned 21.1% since the end of the first quarter (through 7/2) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.