Is Tidewater Inc. (NYSE:TDW) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Tidewater Inc. (NYSE:TDW) the right pick for your portfolio? Money managers are in an optimistic mood. The number of bullish hedge fund positions improved by 3 lately. Our calculations also showed that TDW isn’t among the 30 most popular stocks among hedge funds.
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 market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a look at the new hedge fund action encompassing Tidewater Inc. (NYSE:TDW).
Hedge fund activity in Tidewater Inc. (NYSE:TDW)
At Q4’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in TDW a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Raging Capital Management was the largest shareholder of Tidewater Inc. (NYSE:TDW), with a stake worth $46.3 million reported as of the end of December. Trailing Raging Capital Management was Third Avenue Management, which amassed a stake valued at $46.1 million. Moerus Capital Management, First Pacific Advisors LLC, and Canyon Capital Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Raging Capital Management, managed by William C. Martin, assembled the largest position in Tidewater Inc. (NYSE:TDW). Raging Capital Management had $46.3 million invested in the company at the end of the quarter. Amit Wadhwaney’s Moerus Capital Management also initiated a $27.2 million position during the quarter. The other funds with new positions in the stock are Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors, and David Greenspan’s Slate Path Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Tidewater Inc. (NYSE:TDW) but similarly valued. We will take a look at Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB), FutureFuel Corp. (NYSE:FF), UroGen Pharma Ltd. (NASDAQ:URGN), and German American Bancorp., Inc. (NASDAQ:GABC). All of these stocks’ market caps are closest to TDW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| YMAB | 6 | 51844 | -5 |
| FF | 14 | 57050 | 3 |
| URGN | 12 | 142984 | -1 |
| GABC | 4 | 6870 | -1 |
| Average | 9 | 64687 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $177 million in TDW’s case. FutureFuel Corp. (NYSE:FF) is the most popular stock in this table. On the other hand German American Bancorp., Inc. (NASDAQ:GABC) is the least popular one with only 4 bullish hedge fund positions. Tidewater Inc. (NYSE:TDW) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on TDW as the stock returned 24.9% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
