Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Turquoise Hill Resources Ltd (NYSE:TRQ) based on that data.
Is Turquoise Hill Resources Ltd (NYSE:TRQ) undervalued? The best stock pickers are getting less optimistic. The number of long hedge fund positions decreased by 2 lately. Our calculations also showed that TRQ isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a look at the new hedge fund action surrounding Turquoise Hill Resources Ltd (NYSE:TRQ).
How have hedgies been trading Turquoise Hill Resources Ltd (NYSE:TRQ)?
At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TRQ over the last 18 quarters. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, Pentwater Capital Management was the largest shareholder of Turquoise Hill Resources Ltd (NYSE:TRQ), with a stake worth $69.9 million reported as of the end of September. Trailing Pentwater Capital Management was SailingStone Capital Partners, which amassed a stake valued at $46.3 million. Kopernik Global Investors, Shah Capital Management, and Tudor Investment Corp 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 SailingStone Capital Partners allocated the biggest weight to Turquoise Hill Resources Ltd (NYSE:TRQ), around 25.92% of its 13F portfolio. Kopernik Global Investors is also relatively very bullish on the stock, dishing out 6.64 percent of its 13F equity portfolio to TRQ.
Because Turquoise Hill Resources Ltd (NYSE:TRQ) has witnessed bearish sentiment from the aggregate hedge fund industry, it's easy to see that there was a specific group of hedge funds that decided to sell off their full holdings last quarter. It's worth mentioning that D. E. Shaw's D E Shaw dropped the biggest investment of the 750 funds watched by Insider Monkey, totaling close to $3.8 million in stock. Israel Englander's fund, Millennium Management, also said goodbye to its stock, about $1.8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 2 funds last quarter.
Let's go over hedge fund activity in other stocks similar to Turquoise Hill Resources Ltd (NYSE:TRQ). These stocks are Ferro Corporation (NYSE:FOE), Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT), Livent Corporation (NYSE:LTHM), and The Cheesecake Factory Incorporated (NASDAQ:CAKE). This group of stocks' market caps match TRQ's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FOE,16,117594,0 RCKT,15,172485,-6 LTHM,15,34884,-1 CAKE,22,65962,-5 Average,17,97731,-3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $98 million. That figure was $156 million in TRQ's case. The Cheesecake Factory Incorporated (NASDAQ:CAKE) is the most popular stock in this table. On the other hand Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Turquoise Hill Resources Ltd (NYSE:TRQ) is even less popular than RCKT. Hedge funds clearly dropped the ball on TRQ as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on TRQ as the stock returned 85.2% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.