Here is What Hedge Funds Think About TC Pipelines, LP (TCP)

In this article we will take a look at whether hedge funds think TC Pipelines, LP (NYSE:TCP) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is TC Pipelines, LP (NYSE:TCP) a buy here? Hedge funds were getting more bullish. The number of bullish hedge fund bets improved by 1 in recent months. TC Pipelines, LP (NYSE:TCP) was in 3 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 8. Our calculations also showed that TCP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 2 hedge funds in our database with TCP holdings at the end of June.

Video: Watch our video about the top 5 most popular hedge fund stocks.

To most investors, hedge funds are seen as underperforming, old financial vehicles of yesteryear. While there are more than 8000 funds in operation today, Our experts hone in on the aristocrats of this group, around 850 funds. It is estimated that this group of investors control bulk of the hedge fund industry’s total capital, and by paying attention to their inimitable picks, Insider Monkey has come up with various investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to review the latest hedge fund action regarding TC Pipelines, LP (NYSE:TCP).

How are hedge funds trading TC Pipelines, LP (NYSE:TCP)?

At Q3’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards TCP over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Arrowstreet Capital was the largest shareholder of TC Pipelines, LP (NYSE:TCP), with a stake worth $2.1 million reported as of the end of September. Trailing Arrowstreet Capital was Citadel Investment Group, which amassed a stake valued at $0.6 million. Heronetta Management was 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 Heronetta Management allocated the biggest weight to TC Pipelines, LP (NYSE:TCP), around 0.57% of its 13F portfolio. Callodine Capital Management is also relatively very bullish on the stock, setting aside 0.14 percent of its 13F equity portfolio to TCP.

Consequently, key hedge funds were leading the bulls’ herd. Callodine Capital Management, managed by James Morrow, established the most valuable position in TC Pipelines, LP (NYSE:TCP). Callodine Capital Management had $0.3 million invested in the company at the end of the quarter.

Let’s check out hedge fund activity in other stocks similar to TC Pipelines, LP (NYSE:TCP). These stocks are Cubic Corporation (NYSE:CUB), PRA Group, Inc. (NASDAQ:PRAA), SPX FLOW, Inc. (NYSE:FLOW), Yext, Inc. (NYSE:YEXT), American National Group, Inc. (NASDAQ:ANAT), IAMGOLD Corporation (NYSE:IAG), and Investors Bancorp, Inc. (NASDAQ:ISBC). This group of stocks’ market values are similar to TCP’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.9 hedge funds with bullish positions and the average amount invested in these stocks was $98 million. That figure was $3 million in TCP’s case. Investors Bancorp, Inc. (NASDAQ:ISBC) is the most popular stock in this table. On the other hand Yext, Inc. (NYSE:YEXT) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks TC Pipelines, LP (NYSE:TCP) is even less popular than YEXT. Our overall hedge fund sentiment score for TCP is 17.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds clearly dropped the ball on TCP 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on TCP as the stock returned 23.7% since Q3 (through November 23rd) and outperformed the market by an even larger margin.

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