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Is Tenneco (TEN) Stock A Buy or Sell?

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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Tenneco Inc (NYSE:TEN).

Is TEN stock a buy? Tenneco Inc (NYSE:TEN) has seen an increase in support from the world's most elite money managers lately. Tenneco Inc (NYSE:TEN) was in 25 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 31. Our calculations also showed that TEN isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 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.

Most Popular Stocks Among Hedge Funds
Most Popular Stocks Among Hedge Funds

Carl Icahn of Icahn Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 website. With all of this in mind let's take a look at the fresh hedge fund action regarding Tenneco Inc (NYSE:TEN).

Do Hedge Funds Think TEN Is A Good Stock To Buy Now?

At fourth quarter's end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 39% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TEN over the last 22 quarters. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Among these funds, Icahn Capital LP held the most valuable stake in Tenneco Inc (NYSE:TEN), which was worth $77.2 million at the end of the fourth quarter. On the second spot was Lonestar Capital Management which amassed $11.7 million worth of shares. Appaloosa Management LP, Two Sigma Advisors, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Lonestar Capital Management allocated the biggest weight to Tenneco Inc (NYSE:TEN), around 2% of its 13F portfolio. Icahn Capital LP is also relatively very bullish on the stock, setting aside 0.38 percent of its 13F equity portfolio to TEN.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Lonestar Capital Management, managed by Jerome L. Simon, assembled the biggest position in Tenneco Inc (NYSE:TEN). Lonestar Capital Management had $11.7 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $2.5 million position during the quarter. The following funds were also among the new TEN investors: Peter Muller's PDT Partners, Sander Gerber's Hudson Bay Capital Management, and Paul Marshall and Ian Wace's Marshall Wace LLP.

Let's now take a look at hedge fund activity in other stocks similar to Tenneco Inc (NYSE:TEN). We will take a look at OneSpaWorld Holdings Limited (NASDAQ:OSW), Veeco Instruments Inc. (NASDAQ:VECO), BJ's Restaurants, Inc. (NASDAQ:BJRI), Premier Financial Corp. (NASDAQ:PFC), Scholastic Corp (NASDAQ:SCHL), Quotient Technology Inc (NYSE:QUOT), and trivago N.V. (NASDAQ:TRVG). This group of stocks' market valuations are closest to TEN's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OSW,12,115924,2 VECO,19,353866,0 BJRI,11,55646,-3 PFC,11,63314,-2 SCHL,11,38360,-3 QUOT,19,405591,4 TRVG,8,58941,0 Average,13,155949,-0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $156 million. That figure was $138 million in TEN's case. Veeco Instruments Inc. (NASDAQ:VECO) is the most popular stock in this table. On the other hand trivago N.V. (NASDAQ:TRVG) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Tenneco Inc (NYSE:TEN) is more popular among hedge funds. Our overall hedge fund sentiment score for TEN is 84.2. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Unfortunately TEN wasn't nearly as popular as these 30 stocks and hedge funds that were betting on TEN were disappointed as the stock returned 1.3% since the end of the fourth quarter (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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

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