At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Tata Motors Limited (NYSE:TTM) makes for a good investment right now.
Tata Motors Limited (NYSE:TTM) investors should be aware of a decrease in hedge fund sentiment recently. Our calculations also showed that TTM 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.
Cliff Asness of AQR Capital 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. We’re going to review the fresh hedge fund action regarding Tata Motors Limited (NYSE:TTM).
What have hedge funds been doing with Tata Motors Limited (NYSE:TTM)?
At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -36% from the second quarter of 2019. By comparison, 9 hedge funds held shares or bullish call options in TTM a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the largest position in Tata Motors Limited (NYSE:TTM), worth close to $52.5 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is LMR Partners, led by Ben Levine, Andrew Manuel and Stefan Renold, holding a $25.9 million position; 1.3% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions encompass Israel Englander’s Millennium Management, Cliff Asness’s AQR Capital Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position LMR Partners allocated the biggest weight to Tata Motors Limited (NYSE:TTM), around 1.28% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.04 percent of its 13F equity portfolio to TTM.
Because Tata Motors Limited (NYSE:TTM) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of hedgies that decided to sell off their full holdings last quarter. It’s worth mentioning that Boaz Weinstein’s Saba Capital dumped the largest position of the 750 funds followed by Insider Monkey, comprising close to $2.4 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace was right behind this move, as the fund cut about $1.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 4 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Tata Motors Limited (NYSE:TTM). These stocks are IDACORP Inc (NYSE:IDA), Tallgrass Energy, LP (NYSE:TGE), Allison Transmission Holdings Inc (NYSE:ALSN), and Grupo Televisa SAB (NYSE:TV). This group of stocks’ market values are similar to TTM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IDA | 18 | 366303 | -4 |
| TGE | 20 | 205953 | 7 |
| ALSN | 28 | 883019 | 3 |
| TV | 14 | 826232 | -4 |
| Average | 20 | 570377 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $570 million. That figure was $93 million in TTM’s case. Allison Transmission Holdings Inc (NYSE:ALSN) is the most popular stock in this table. On the other hand Grupo Televisa SAB (NYSE:TV) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Tata Motors Limited (NYSE:TTM) is even less popular than TV. Hedge funds clearly dropped the ball on TTM as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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. A small number of hedge funds were also right about betting on TTM as the stock returned 33.7% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
