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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Teekay Tankers Ltd. (NYSE:TNK) in this article.
Is TNK a good stock to buy now? The smart money was cutting their exposure. The number of bullish hedge fund positions shrunk by 4 in recent months. Teekay Tankers Ltd. (NYSE:TNK) was in 13 hedge funds' portfolios at the end of September. The all time high for this statistic is 21. Our calculations also showed that TNK 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.
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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Philippe Laffont of Coatue Management
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 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. Keeping this in mind let's view the latest hedge fund action encompassing Teekay Tankers Ltd. (NYSE:TNK).
Do Hedge Funds Think TNK Is A Good Stock To Buy Now?
At the end of September, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -24% from the second quarter of 2020. By comparison, 18 hedge funds held shares or bullish call options in TNK a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Coatue Management, managed by Philippe Laffont, holds the number one position in Teekay Tankers Ltd. (NYSE:TNK). Coatue Management has a $7.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $3.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism encompass Nathaniel August's Mangrove Partners, Ken Griffin's Citadel Investment Group and Noam Gottesman's GLG Partners. In terms of the portfolio weights assigned to each position Mangrove Partners allocated the biggest weight to Teekay Tankers Ltd. (NYSE:TNK), around 0.41% of its 13F portfolio. Diametric Capital is also relatively very bullish on the stock, dishing out 0.18 percent of its 13F equity portfolio to TNK.
Because Teekay Tankers Ltd. (NYSE:TNK) has faced bearish sentiment from the smart money, we can see that there lies a certain "tier" of money managers that decided to sell off their full holdings in the third quarter. At the top of the heap, Renaissance Technologies said goodbye to the largest stake of the 750 funds tracked by Insider Monkey, comprising close to $2.7 million in stock. Donald Sussman's fund, Paloma Partners, also sold off its stock, about $2.1 million worth. These moves are important to note, as total hedge fund interest was cut by 4 funds in the third quarter.
Let's now review hedge fund activity in other stocks similar to Teekay Tankers Ltd. (NYSE:TNK). These stocks are Par Pacific Holdings, Inc. (NYSE:PARR), IDEAYA Biosciences, Inc. (NASDAQ:IDYA), Nam Tai Property Inc (NYSE:NTP), Ovid Therapeutics Inc. (NASDAQ:OVID), NI Holdings, Inc. (NASDAQ:NODK), Caleres Inc (NYSE:CAL), and Helix Energy Solutions Group Inc. (NYSE:HLX). This group of stocks' market caps are closest to TNK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PARR,15,63142,1 IDYA,12,69419,0 NTP,4,23101,-2 OVID,15,39390,4 NODK,5,24232,-1 CAL,17,30223,2 HLX,14,16489,4 Average,11.7,37999,1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.7 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $20 million in TNK's case. Caleres Inc (NYSE:CAL) is the most popular stock in this table. On the other hand Nam Tai Property Inc (NYSE:NTP) is the least popular one with only 4 bullish hedge fund positions. Teekay Tankers Ltd. (NYSE:TNK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TNK is 54.2. 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 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on TNK, though not to the same extent, as the stock returned 10.6% since Q3 (through December 8th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.