Here is What Hedge Funds Think About TravelCenters of America LLC (TA)

Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like TravelCenters of America LLC (NASDAQ:TA) .

TravelCenters of America LLC (NASDAQ:TA) was in 14 hedge funds’ portfolios at the end of the third quarter of 2016. TA shareholders have witnessed a decrease in hedge fund interest in recent months. There were 15 hedge funds in our database with TA holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Phoenix New Media Ltd ADR (NYSE:FENG), Golden Entertainment Inc (NASDAQ:GDEN), and Seneca Foods Corp (NASDAQ:SENEA) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Now, we’re going to take a look at the key action surrounding TravelCenters of America LLC (NASDAQ:TA).

How have hedgies been trading TravelCenters of America LLC (NASDAQ:TA)?

At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, down 7% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TA over the last 5 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Chuck Royce’s Royce & Associates has the number one position in TravelCenters of America LLC (NASDAQ:TA), worth close to $12.3 million. Coming in second is Renaissance Technologies, one of the 10 largest hedge funds in the world, with an $11.5 million position. Remaining members of the smart money that hold long positions encompass Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, Israel Englander’s Millennium Management and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that Nantahala Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Due to the fact that TravelCenters of America LLC (NASDAQ:TA) has experienced a decline in interest from the smart money, logic holds that there exists a select few fund managers that slashed their positions entirely in the third quarter. At the top of the heap, Wayne Cooperman’s Cobalt Capital Management cut the biggest position of the 700 funds watched by Insider Monkey, worth close to $0.4 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dropped about $0.4 million worth of shares.

Let’s check out hedge fund activity in other stocks similar to TravelCenters of America LLC (NASDAQ:TA). These stocks are Phoenix New Media Ltd ADR (NYSE:FENG), Golden Entertainment Inc (NASDAQ:GDEN), Seneca Foods Corp (NASDAQ:SENEA), and Territorial Bancorp Inc (NASDAQ:TBNK). This group of stocks’ market values are closest to TA’s market value.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $29 million in TA’s case. Phoenix New Media Ltd ADR (NYSE:FENG) is the most popular stock in this table. On the other hand Territorial Bancorp Inc (NASDAQ:TBNK) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks TravelCenters of America LLC (NASDAQ:TA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None