While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Tupperware Brands Corporation (NYSE:TUP).
Tupperware Brands Corporation (NYSE:TUP) shareholders have witnessed a decrease in hedge fund sentiment recently. Our calculations also showed that TUP 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.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Overdeck of Two Sigma Advisors
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 take a look at the new hedge fund action regarding Tupperware Brands Corporation (NYSE:TUP).
Hedge fund activity in Tupperware Brands Corporation (NYSE:TUP)
Heading into the fourth quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the previous quarter. By comparison, 22 hedge funds held shares or bullish call options in TUP a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Tupperware Brands Corporation (NYSE:TUP) was held by AQR Capital Management, which reported holding $39.8 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $22.6 million position. Other investors bullish on the company included D E Shaw, Two Sigma Advisors, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Huber Capital Management allocated the biggest weight to Tupperware Brands Corporation (NYSE:TUP), around 0.63% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, setting aside 0.25 percent of its 13F equity portfolio to TUP.
Due to the fact that Tupperware Brands Corporation (NYSE:TUP) has faced falling interest from the smart money, it’s easy to see that there exists a select few funds that elected to cut their full holdings in the third quarter. It’s worth mentioning that Jeffrey Bronchick’s Cove Street Capital cut the largest stake of all the hedgies watched by Insider Monkey, comprising an estimated $8.9 million in stock. Minhua Zhang’s fund, Weld Capital Management, also sold off its stock, about $1.7 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 3 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Tupperware Brands Corporation (NYSE:TUP) but similarly valued. We will take a look at Eagle Pharmaceuticals Inc (NASDAQ:EGRX), Partner Communications Company Ltd (NASDAQ:PTNR), Washington Prime Group Inc. (NYSE:WPG), and ZIOPHARM Oncology Inc. (NASDAQ:ZIOP). All of these stocks’ market caps resemble TUP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EGRX | 16 | 146879 | -4 |
| PTNR | 1 | 12616 | -1 |
| WPG | 5 | 9261 | -6 |
| ZIOP | 16 | 142289 | 4 |
| Average | 9.5 | 77761 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $112 million in TUP’s case. Eagle Pharmaceuticals Inc (NASDAQ:EGRX) is the most popular stock in this table. On the other hand Partner Communications Company Ltd (NASDAQ:PTNR) is the least popular one with only 1 bullish hedge fund positions. Tupperware Brands Corporation (NYSE:TUP) 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 TUP wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TUP were disappointed as the stock returned -46.8% 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.
