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Is TravelCenters of America Inc. (TA) Going To Burn These Hedge Funds ?

Nina Todic

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards TravelCenters of America Inc. (NASDAQ:TA).

TravelCenters of America Inc. (NASDAQ:TA) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 7 hedge funds' portfolios at the end of September. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Avenue Therapeutics, Inc. (NASDAQ:ATXI), Shiloh Industries, Inc. (NASDAQ:SHLO), and Waitr Holdings Inc. (NASDAQ:WTRH) to gather more data points. Our calculations also showed that TA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.

[caption id="attachment_189632" align="aligncenter" width="450"] David Harding of Winton Capital Management[/caption]

David Harding

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's view the recent hedge fund action regarding TravelCenters of America Inc. (NASDAQ:TA).

What have hedge funds been doing with TravelCenters of America Inc. (NASDAQ:TA)?

At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards TA over the last 17 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in TravelCenters of America Inc. (NASDAQ:TA), which was worth $4.5 million at the end of the third quarter. On the second spot was Nantahala Capital Management which amassed $4.2 million worth of shares. Millennium Management, Proxima Capital Management, and Winton Capital Management 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 Proxima Capital Management allocated the biggest weight to TravelCenters of America Inc. (NASDAQ:TA), around 0.8% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, earmarking 0.15 percent of its 13F equity portfolio to TA.

Seeing as TravelCenters of America Inc. (NASDAQ:TA) has faced a decline in interest from the entirety of the hedge funds we track, logic holds that there exists a select few hedgies that decided to sell off their entire stakes by the end of the third quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dumped the largest position of the 750 funds monitored by Insider Monkey, valued at an estimated $0.2 million in stock, and Peter Muller's PDT Partners was right behind this move, as the fund sold off about $0.2 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's check out hedge fund activity in other stocks similar to TravelCenters of America Inc. (NASDAQ:TA). These stocks are Avenue Therapeutics, Inc. (NASDAQ:ATXI), Shiloh Industries, Inc. (NASDAQ:SHLO), Waitr Holdings Inc. (NASDAQ:WTRH), and Aspen Group Inc. (NASDAQ:ASPU). All of these stocks' market caps resemble TA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATXI,1,5677,-1 SHLO,5,2283,-1 WTRH,10,15367,-7 ASPU,3,7481,-1 Average,4.75,7702,-2.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $11 million in TA's case. Waitr Holdings Inc. (NASDAQ:WTRH) is the most popular stock in this table. On the other hand Avenue Therapeutics, Inc. (NASDAQ:ATXI) is the least popular one with only 1 bullish hedge fund positions. TravelCenters of America Inc. (NASDAQ:TA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately TA wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TA were disappointed as the stock returned -17.5% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.

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

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