The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and famous investors' filings. In this article, we analyze how these elite funds and prominent investors traded Tenaris S.A. (NYSE:TS) based on those filings.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a gander at the recent hedge fund action encompassing Tenaris S.A. (NYSE:TS).
What have hedge funds been doing with Tenaris S.A. (NYSE:TS)?
At Q1's end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the fourth quarter of 2018. By comparison, 17 hedge funds held shares or bullish call options in TS a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
More specifically, Egerton Capital Limited was the largest shareholder of Tenaris S.A. (NYSE:TS), with a stake worth $361.9 million reported as of the end of March. Trailing Egerton Capital Limited was Millennium Management, which amassed a stake valued at $154.3 million. Citadel Investment Group, Ariel Investments, and Renaissance Technologies were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, specific money managers were breaking ground themselves. Encompass Capital Advisors, managed by Todd J. Kantor, assembled the most outsized position in Tenaris S.A. (NYSE:TS). Encompass Capital Advisors had $9.9 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also initiated a $9.9 million position during the quarter. The other funds with brand new TS positions are Sara Nainzadeh's Centenus Global Management, Brandon Haley's Holocene Advisors, and Anand Parekh's Alyeska Investment Group.
Let's also examine hedge fund activity in other stocks similar to Tenaris S.A. (NYSE:TS). These stocks are Liberty Broadband Corp (NASDAQ:LBRDK), Liberty Broadband Corp (NASDAQ:LBRDA), CBRE Group, Inc. (NYSE:CBRE), and Restaurant Brands International Inc (NYSE:QSR). All of these stocks' market caps match TS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LBRDK,39,3313669,4 LBRDA,19,579556,0 CBRE,31,1403036,-3 QSR,37,3609311,0 Average,31.5,2226393,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.5 hedge funds with bullish positions and the average amount invested in these stocks was $2226 million. That figure was $775 million in TS's case. Liberty Broadband Corp (NASDAQ:LBRDK) is the most popular stock in this table. On the other hand Liberty Broadband Corp (NASDAQ:LBRDA) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Tenaris S.A. (NYSE:TS) is even less popular than LBRDA. Hedge funds dodged a bullet by taking a bearish stance towards TS. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately TS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); TS investors were disappointed as the stock returned -10.4% during the same time frame 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 the second quarter.
Disclosure: None. This article was originally published at Insider Monkey.