World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Is Tenneco Inc (NYSE:TEN) undervalued? Investors who are in the know are getting more optimistic. The number of long hedge fund bets advanced by 1 in recent months. Our calculations also showed that ten isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to review the latest hedge fund action regarding Tenneco Inc (NYSE:TEN).
How have hedgies been trading Tenneco Inc (NYSE:TEN)?
Heading into the second quarter of 2019, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from one quarter earlier. By comparison, 26 hedge funds held shares or bullish call options in TEN a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Icahn Capital LP, managed by Carl Icahn, holds the largest position in Tenneco Inc (NYSE:TEN). Icahn Capital LP has a $125.2 million position in the stock, comprising 0.5% of its 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $16.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions encompass Mario Gabelli’s GAMCO Investors, Ric Dillon’s Diamond Hill Capital and Matthew Hulsizer’s PEAK6 Capital Management.
As one would reasonably expect, key hedge funds were leading the bulls’ herd. PEAK6 Capital Management, managed by Matthew Hulsizer, created the most valuable call position in Tenneco Inc (NYSE:TEN). PEAK6 Capital Management had $1.4 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $1.1 million position during the quarter. The following funds were also among the new TEN investors: Paul Tudor Jones’s Tudor Investment Corp, Murray Stahl’s Horizon Asset Management, and Thomas Bailard’s Bailard Inc.
Let’s now review hedge fund activity in other stocks similar to Tenneco Inc (NYSE:TEN). We will take a look at Varonis Systems Inc (NASDAQ:VRNS), Euronav NV (NYSE:EURN), M.D.C. Holdings, Inc. (NYSE:MDC), and JELD-WEN Holding, Inc. (NYSE:JELD). This group of stocks’ market caps match TEN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VRNS | 25 | 272768 | 4 |
| EURN | 11 | 111173 | 0 |
| MDC | 17 | 102582 | 1 |
| JELD | 21 | 327610 | 5 |
| Average | 18.5 | 203533 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $204 million. That figure was $195 million in TEN’s case. Varonis Systems Inc (NASDAQ:VRNS) is the most popular stock in this table. On the other hand Euronav NV (NYSE:EURN) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Tenneco Inc (NYSE:TEN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately TEN wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TEN were disappointed as the stock returned -51.5% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
