Hedge Funds Cashing Out Of Teck Resources Ltd (TECK)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Teck Resources Ltd (NYSE:TECK) based on those filings.

Teck Resources Ltd (NYSE:TECK) investors should pay attention to a decrease in enthusiasm from smart money lately. TECK was in 24 hedge funds’ portfolios at the end of March. There were 30 hedge funds in our database with TECK holdings at the end of the previous quarter. Our calculations also showed that TECK 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.

Today there are tons of signals investors use to evaluate stocks. Two of the best signals are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the S&P 500 by a solid amount (see the details here).

Phill Gross of Adage Capital Management

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the fresh hedge fund action encompassing Teck Resources Ltd (NYSE:TECK).

Hedge fund activity in Teck Resources Ltd (NYSE:TECK)

At Q1’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TECK over the last 18 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Stephen Mildenhall’s Contrarius Investment Management has the biggest position in Teck Resources Ltd (NYSE:TECK), worth close to $72.8 million, comprising 9.3% of its total 13F portfolio. The second largest stake is held by Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $68.9 million position; 0.2% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish encompass Robert Bishop’s Impala Asset Management, Ken Griffin’s Citadel Investment Group and Mike Masters’s Masters Capital Management. In terms of the portfolio weights assigned to each position Contrarius Investment Management allocated the biggest weight to Teck Resources Ltd (NYSE:TECK), around 9.32% of its 13F portfolio. Impala Asset Management is also relatively very bullish on the stock, setting aside 3.97 percent of its 13F equity portfolio to TECK.

Since Teck Resources Ltd (NYSE:TECK) has faced falling interest from the smart money, it’s easy to see that there exists a select few fund managers that decided to sell off their entire stakes in the first quarter. Intriguingly, Todd J. Kantor’s Encompass Capital Advisors dumped the biggest position of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $14.3 million in stock. Ken Heebner’s fund, Capital Growth Management, also dropped its stock, about $10.4 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 6 funds in the first quarter.

Let’s now review hedge fund activity in other stocks similar to Teck Resources Ltd (NYSE:TECK). We will take a look at Churchill Downs Incorporated (NASDAQ:CHDN), Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC), Quidel Corporation (NASDAQ:QDEL), and Axalta Coating Systems Ltd (NYSE:AXTA). All of these stocks’ market caps match TECK’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $429 million. That figure was $259 million in TECK’s case. Axalta Coating Systems Ltd (NYSE:AXTA) is the most popular stock in this table. On the other hand Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) is the least popular one with only 3 bullish hedge fund positions. Teck Resources Ltd (NYSE:TECK) is not the least popular stock in this group but hedge fund interest is still below average. 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on TECK as the stock returned 52.4% during the second quarter and outperformed the market by an even larger margin.

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