- Oops!Something went wrong.Please try again later.
Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards TPI Composites, Inc. (NASDAQ:TPIC) to find out whether there were any major changes in hedge funds' views.
Is TPIC a good stock to buy now? TPI Composites, Inc. (NASDAQ:TPIC) has experienced an increase in hedge fund interest lately. TPI Composites, Inc. (NASDAQ:TPIC) was in 20 hedge funds' portfolios at the end of September. The all time high for this statistic is 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TPIC 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.
Michael Gelband of ExodusPoint Capital
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 take a peek at the fresh hedge fund action regarding TPI Composites, Inc. (NASDAQ:TPIC).
Do Hedge Funds Think TPIC Is A Good Stock To Buy Now?
At the end of September, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 54% from the second quarter of 2020. On the other hand, there were a total of 16 hedge funds with a bullish position in TPIC 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.
When looking at the institutional investors followed by Insider Monkey, Bruce Emery's Greenvale Capital has the largest position in TPI Composites, Inc. (NASDAQ:TPIC), worth close to $29 million, comprising 4.9% of its total 13F portfolio. On Greenvale Capital's heels is Portsea Asset Management, led by Cyrus de Weck, holding a $20.2 million position; the fund has 16.4% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism contain Jos Shaver's Electron Capital Partners, Richard Driehaus's Driehaus Capital and Michael Gelband's ExodusPoint Capital. In terms of the portfolio weights assigned to each position Portsea Asset Management allocated the biggest weight to TPI Composites, Inc. (NASDAQ:TPIC), around 16.41% of its 13F portfolio. Greenvale Capital is also relatively very bullish on the stock, earmarking 4.89 percent of its 13F equity portfolio to TPIC.
Now, key money managers have jumped into TPI Composites, Inc. (NASDAQ:TPIC) headfirst. Greenvale Capital, managed by Bruce Emery, created the most outsized position in TPI Composites, Inc. (NASDAQ:TPIC). Greenvale Capital had $29 million invested in the company at the end of the quarter. Cyrus de Weck's Portsea Asset Management also made a $20.2 million investment in the stock during the quarter. The following funds were also among the new TPIC investors: Renaissance Technologies, George McCabe's Portolan Capital Management, and John Brennan's Sirios Capital Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as TPI Composites, Inc. (NASDAQ:TPIC) but similarly valued. These stocks are Covanta Holding Corporation (NYSE:CVA), Malibu Boats Inc (NASDAQ:MBUU), Ferro Corporation (NYSE:FOE), Comstock Resources Inc (NYSE:CRK), Franchise Group, Inc. (NASDAQ:FRG), The Macerich Company (NYSE:MAC), and DRDGOLD Ltd. (NYSE:DRD). This group of stocks' market values resemble TPIC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CVA,23,79339,2 MBUU,19,119790,0 FOE,15,145226,-3 CRK,24,123591,7 FRG,12,61800,-4 MAC,18,42563,-2 DRD,9,32197,7 Average,17.1,86358,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.1 hedge funds with bullish positions and the average amount invested in these stocks was $86 million. That figure was $104 million in TPIC's case. Comstock Resources Inc (NYSE:CRK) is the most popular stock in this table. On the other hand DRDGOLD Ltd. (NYSE:DRD) is the least popular one with only 9 bullish hedge fund positions. TPI Composites, Inc. (NASDAQ:TPIC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TPIC is 76.7. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on TPIC as the stock returned 50.2% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Get real-time email alerts: Follow Tpi Composites Inc
Disclosure: None. This article was originally published at Insider Monkey.