In this article you are going to find out whether hedge funds think Tecnoglass Inc. (NASDAQ:TGLS) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Tecnoglass Inc. (NASDAQ:TGLS) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds' portfolios at the end of March. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Viemed Healthcare, Inc. (NASDAQ:VMD), VSE Corporation (NASDAQ:VSEC), and Fluidigm Corporation (NASDAQ:FLDM) to gather more data points. Our calculations also showed that TGLS 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.
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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Rudolph Kluiber of GRT Capital Partners[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to view the recent hedge fund action surrounding Tecnoglass Inc. (NASDAQ:TGLS).
What have hedge funds been doing with Tecnoglass Inc. (NASDAQ:TGLS)?
At Q1's end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in TGLS over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Tecnoglass Inc. (NASDAQ:TGLS) was held by Rutabaga Capital Management, which reported holding $3.2 million worth of stock at the end of September. It was followed by Polaris Capital Management with a $1.5 million position. Other investors bullish on the company included Blue Grotto Capital, Gratia Capital, and GRT Capital Partners. In terms of the portfolio weights assigned to each position Gratia Capital allocated the biggest weight to Tecnoglass Inc. (NASDAQ:TGLS), around 3.46% of its 13F portfolio. Rutabaga Capital Management is also relatively very bullish on the stock, setting aside 1.89 percent of its 13F equity portfolio to TGLS.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Renaissance Technologies. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Gratia Capital).
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 Viemed Healthcare, Inc. (NASDAQ:VMD), VSE Corporation (NASDAQ:VSEC), Fluidigm Corporation (NASDAQ:FLDM), and Galiano Gold Inc (NYSE:AKG). This group of stocks' market values are similar to TGLS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VMD,7,8912,-1 VSEC,4,1723,-1 FLDM,16,42366,-2 AKG,4,24151,-1 Average,7.75,19288,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $7 million in TGLS's case. Fluidigm Corporation (NASDAQ:FLDM) is the most popular stock in this table. On the other hand VSE Corporation (NASDAQ:VSEC) is the least popular one with only 4 bullish hedge fund positions. Tecnoglass Inc. (NASDAQ:TGLS) is not the least popular stock in this group but hedge fund interest is still below average. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on TGLS as the stock returned 27.2% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.