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At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK).
Is TLK a good stock to buy now? Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK) was in 8 hedge funds' portfolios at the end of September. The all time high for this statistics is 11. TLK investors should pay attention to an increase in hedge fund sentiment lately. There were 4 hedge funds in our database with TLK positions at the end of the second quarter. Our calculations also showed that TLK isn't among the 30 most popular stocks among hedge funds (click for Q3 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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.
Paul Marshall of Marshall Wace
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with 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 we're going to review the fresh hedge fund action regarding Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK).
What does smart money think about Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in TLK a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK), which was worth $90 million at the end of the third quarter. On the second spot was Oldfield Partners which amassed $35.3 million worth of shares. Marshall Wace LLP, Millennium Management, and Citadel Investment Group 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 Oldfield Partners allocated the biggest weight to Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK), around 3.81% of its 13F portfolio. Stevens Capital Management is also relatively very bullish on the stock, dishing out 0.13 percent of its 13F equity portfolio to TLK.
Now, some big names have jumped into Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the biggest position in Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK). Marshall Wace LLP had $4.7 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $1.7 million position during the quarter. The following funds were also among the new TLK investors: Ken Griffin's Citadel Investment Group, Matthew Tewksbury's Stevens Capital Management, and Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital).
Let's go over hedge fund activity in other stocks similar to Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK). These stocks are Smith & Nephew plc (NYSE:SNN), Horizon Therapeutics Public Limited Company (NASDAQ:HZNP), Kansas City Southern (NYSE:KSU), CDW Corporation (NASDAQ:CDW), Citrix Systems, Inc. (NASDAQ:CTXS), Fox Corporation (NASDAQ:FOX), and Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). This group of stocks' market valuations match TLK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SNN,10,59424,-2 HZNP,61,4038716,16 KSU,53,1074081,6 CDW,30,1334920,-10 CTXS,31,643896,-5 FOX,15,579708,-5 ALNY,35,902645,-3 Average,33.6,1233341,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.6 hedge funds with bullish positions and the average amount invested in these stocks was $1233 million. That figure was $133 million in TLK's case. Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) is the most popular stock in this table. On the other hand Smith & Nephew plc (NYSE:SNN) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK) is even less popular than SNN. Our overall hedge fund sentiment score for TLK is 30.8. 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. Hedge funds clearly dropped the ball on TLK as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on TLK as the stock returned 34% since Q3 (through December 2nd) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.