“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Textainer Group Holdings Limited (NYSE:TGH).
Textainer Group Holdings Limited (NYSE:TGH) investors should be aware of an increase in hedge fund interest of late. TGH was in 9 hedge funds’ portfolios at the end of September. There were 7 hedge funds in our database with TGH positions at the end of the previous quarter. Our calculations also showed that TGH 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.
If you’d ask most market participants, hedge funds are assumed to be slow, outdated investment vehicles of yesteryear. While there are over 8000 funds with their doors open at the moment, Our experts choose to focus on the top tier of this group, approximately 750 funds. These hedge fund managers handle the lion’s share of all hedge funds’ total capital, and by following their top investments, Insider Monkey has spotted numerous investment strategies that have historically outpaced the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Israel Englander of Millennium Management
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 check out the new hedge fund action surrounding Textainer Group Holdings Limited (NYSE:TGH).
How are hedge funds trading Textainer Group Holdings Limited (NYSE:TGH)?
At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from one quarter earlier. By comparison, 7 hedge funds held shares or bullish call options in TGH a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
The largest stake in Textainer Group Holdings Limited (NYSE:TGH) was held by Rutabaga Capital Management, which reported holding $7.3 million worth of stock at the end of September. It was followed by Millennium Management with a $4.9 million position. Other investors bullish on the company included Renaissance Technologies, Citadel Investment Group, and D E Shaw. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to Textainer Group Holdings Limited (NYSE:TGH), around 2.57% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, dishing out 0.09 percent of its 13F equity portfolio to TGH.
As industrywide interest jumped, specific money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, created the largest position in Textainer Group Holdings Limited (NYSE:TGH). Millennium Management had $4.9 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also made a $0.5 million investment in the stock during the quarter. The following funds were also among the new TGH investors: Ken Griffin’s Citadel Investment Group, Paul Tudor Jones’s Tudor Investment Corp, and Paul Marshall and Ian Wace’s Marshall Wace.
Let’s check out hedge fund activity in other stocks similar to Textainer Group Holdings Limited (NYSE:TGH). We will take a look at Collier Creek Holdings (NYSE:CCH), The York Water Company (NASDAQ:YORW), Bank of Marin Bancorp (NASDAQ:BMRC), and Viomi Technology Co., Ltd (NASDAQ:VIOT). This group of stocks’ market values are similar to TGH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CCH | 18 | 153166 | -1 |
| YORW | 7 | 22922 | 2 |
| BMRC | 5 | 20218 | 0 |
| VIOT | 3 | 24469 | 0 |
| Average | 8.25 | 55194 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $21 million in TGH’s case. Collier Creek Holdings (NYSE:CCH) is the most popular stock in this table. On the other hand Viomi Technology Co., Ltd (NASDAQ:VIOT) is the least popular one with only 3 bullish hedge fund positions. Textainer Group Holdings Limited (NYSE:TGH) 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 TGH wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TGH were disappointed as the stock returned -7.9% 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.
