How do we determine whether Textainer Group Holdings Limited (NYSE:TGH) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Textainer Group Holdings Limited (NYSE:TGH) investors should be aware of an increase in hedge fund sentiment of late. Our calculations also showed that TGH isn't among the 30 most popular stocks among hedge funds.
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.
Let's take a look at the new hedge fund action encompassing Textainer Group Holdings Limited (NYSE:TGH).
How are hedge funds trading Textainer Group Holdings Limited (NYSE:TGH)?
Heading into the second quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 43% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TGH over the last 15 quarters. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in Textainer Group Holdings Limited (NYSE:TGH) was held by Rutabaga Capital Management, which reported holding $9.7 million worth of stock at the end of March. It was followed by Royce & Associates with a $6.6 million position. Other investors bullish on the company included Renaissance Technologies, Citadel Investment Group, and Millennium Management.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Textainer Group Holdings Limited (NYSE:TGH) headfirst. PEAK6 Capital Management, managed by Matthew Hulsizer, assembled the largest position in Textainer Group Holdings Limited (NYSE:TGH). PEAK6 Capital Management had $0.2 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $0.2 million position during the quarter. The following funds were also among the new TGH investors: D. E. Shaw's D E Shaw, Michael Platt and William Reeves's BlueCrest Capital Mgmt., and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's also examine hedge fund activity in other stocks similar to Textainer Group Holdings Limited (NYSE:TGH). These stocks are Model N Inc (NYSE:MODN), SunCoke Energy, Inc (NYSE:SXC), The First of Long Island Corporation (NASDAQ:FLIC), and Ribbon Communications Inc. (NASDAQ:RBBN). This group of stocks' market caps are similar to TGH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MODN,16,101079,2 SXC,21,96805,4 FLIC,9,37076,0 RBBN,12,37336,-3 Average,14.5,68074,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $21 million in TGH's case. SunCoke Energy, Inc (NYSE:SXC) is the most popular stock in this table. On the other hand The First of Long Island Corporation (NASDAQ:FLIC) is the least popular one with only 9 bullish hedge fund positions. Textainer Group Holdings Limited (NYSE:TGH) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately TGH wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TGH investors were disappointed as the stock returned 2.4% 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.