Here Is What Hedge Funds Think of Teekay Corporation (TK)

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 5.2% over the 12-month period ending October 30, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey (as of September 2014) generated a return of 9.5% over the same time span, with 63% of these stocks outperforming the benchmark. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Teekay Corporation (NYSE:TK).

Is Teekay Corporation (NYSE:TK) going to take off soon? Prominent investors are in a bearish mood. The number of long hedge fund positions shrunk by 4 recently. TK was in 19 hedge funds’ portfolios at the end of the third quarter of 2015. There were 23 hedge funds in our database with TK 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 CyrusOne Inc (NASDAQ:CONE), Monro Muffler Brake Inc (NASDAQ:MNRO), and WP Glimcher Inc (NYSE:WPG) to gather more data points.

Now, let’s go over the recent action regarding Teekay Corporation (NYSE:TK).

What does the smart money think about Teekay Corporation (NYSE:TK)?

Heading into Q4, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Alec Litowitz and Ross Laser’s Magnetar Capital has the most valuable position in Teekay Corporation (NYSE:TK), worth close to $193.5 million, comprising 5% of its total 13F portfolio. Coming in second is Brenner West Capital Partners, led by Joshua Kaufman and Craig Nerenberg, holding a $21.3 million position; the fund has 2.9% of its 13F portfolio invested in the stock. Other peers that are bullish comprise Steve Cohen’s Point72 Asset Management, Richard Mashaal’s Rima Senvest Management and Wayne Cooperman’s Cobalt Capital Management.

Because Teekay Corporation (NYSE:TK) has faced a declination in interest from the smart money, it’s easy to see that there is a sect of hedge funds that slashed their entire stakes by the end of the third quarter. Intriguingly, Marc Lisker, Glenn Fuhrman and John Phelan’s MSDC Management sold off the biggest investment of the 700 funds monitored by Insider Monkey, valued at close to $27.8 million in stock. Robert Vollero and Gentry T. Beach’s fund, Vollero Beach Capital Partners, also said goodbye to its stock, about $18.5 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 4 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to Teekay Corporation (NYSE:TK). We will take a look at CyrusOne Inc (NASDAQ:CONE), Monro Muffler Brake Inc (NASDAQ:MNRO), WP Glimcher Inc (NYSE:WPG), and Zulily Inc (NASDAQ:ZU). This group of stocks’ market caps are similar to TK’s market cap.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $178 million. That figure was $290 million in TK’s case. CyrusOne Inc (NASDAQ:CONE) is the most popular stock in this table. On the other hand Zulily Inc (NASDAQ:ZU) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Teekay Corporation (NYSE:TK) 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.