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Hedge Funds Were Getting Burned By Tata Motors Limited (TTM) Before The Coronavirus

Abigail Fisher

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 835 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of December 31st, 2019. In this article we are going to take a look at smart money sentiment towards Tata Motors Limited (NYSE:TTM).

Tata Motors Limited (NYSE:TTM) shareholders have witnessed an increase in support from the world's most elite money managers lately. Our calculations also showed that TTM isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (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 35.3% through March 3rd. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

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Xiniya Earnings Call Transcript XNY 2014 Q3

We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. Now let's go over the latest hedge fund action regarding Tata Motors Limited (NYSE:TTM).

How have hedgies been trading Tata Motors Limited (NYSE:TTM)?

At Q4's end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 57% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards TTM over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Renaissance Technologies, holds the biggest position in Tata Motors Limited (NYSE:TTM). Renaissance Technologies has a $92.2 million position in the stock, comprising 0.1% of its 13F portfolio. On Renaissance Technologies's heels is LMR Partners, led by Ben Levine, Andrew Manuel and Stefan Renold, holding a $24.5 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions consist of Simon Sadler's Segantii Capital, Cliff Asness's AQR Capital Management and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position LMR Partners allocated the biggest weight to Tata Motors Limited (NYSE:TTM), around 1.16% of its 13F portfolio. Segantii Capital is also relatively very bullish on the stock, earmarking 0.68 percent of its 13F equity portfolio to TTM.

As industrywide interest jumped, specific money managers were breaking ground themselves. Segantii Capital, managed by Simon Sadler, assembled the most outsized position in Tata Motors Limited (NYSE:TTM). Segantii Capital had $9.4 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also made a $1.6 million investment in the stock during the quarter. The other funds with brand new TTM positions are John Overdeck and David Siegel's Two Sigma Advisors and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Tata Motors Limited (NYSE:TTM) but similarly valued. These stocks are Snap-on Incorporated (NYSE:SNA), Kirkland Lake Gold Ltd. (NYSE:KL), AngloGold Ashanti Limited (NYSE:AU), and Caesars Entertainment Corp (NASDAQ:CZR). All of these stocks' market caps are closest to TTM's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SNA,27,557734,0 KL,24,508654,8 AU,17,542302,-2 CZR,46,4006799,0 Average,28.5,1403872,1.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $1404 million. That figure was $148 million in TTM's case. Caesars Entertainment Corp (NASDAQ:CZR) is the most popular stock in this table. On the other hand AngloGold Ashanti Limited (NYSE:AU) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Tata Motors Limited (NYSE:TTM) is even less popular than AU. Hedge funds dodged a bullet by taking a bearish stance towards TTM. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but managed to beat the market by 3.2 percentage points. Unfortunately TTM wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); TTM investors were disappointed as the stock returned -60.2% 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 most of these stocks already outperformed the market so far in Q1. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

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