“Market volatility has picked up again over the past few weeks. Headlines highlight risks regarding interest rates, the Fed, China, house prices, auto sales, trade wars, and more. Uncertainty abounds. But doesn’t it always? I have no view on whether the recent volatility will continue for a while, or whether the market will be back at all-time highs before we know it. I remain focused on preserving and growing our capital, and continue to believe that the best way to do so is via a value-driven, concentrated, patient approach. I shun consensus holdings, rich valuations, and market fads, in favor of solid, yet frequently off-the-beaten-path, businesses run by excellent, aligned management teams, purchased at deep discounts to intrinsic value,” are the words of Maran Capital’s Dan Roller. His stock picks have been beating the S&P 500 Index handily. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards Tredegar Corporation (NYSE:TG) and see how it was affected.
Tredegar Corporation (NYSE:TG) investors should be aware of a decrease in support from the world’s most elite money managers of late. TG was in 11 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 12 hedge funds in our database with TG positions at the end of the previous quarter. Our calculations also showed that TG isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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.
We’re going to take a glance at the latest hedge fund action regarding Tredegar Corporation (NYSE:TG).
How have hedgies been trading Tredegar Corporation (NYSE:TG)?
At Q4’s end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TG over the last 14 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, GAMCO Investors was the largest shareholder of Tredegar Corporation (NYSE:TG), with a stake worth $61.8 million reported as of the end of December. Trailing GAMCO Investors was Renaissance Technologies, which amassed a stake valued at $1.9 million. Millennium Management, AQR Capital Management, and Bailard Inc were also very fond of the stock, giving the stock large weights in their portfolios.
Since Tredegar Corporation (NYSE:TG) has faced falling interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of hedge funds who sold off their entire stakes last quarter. Intriguingly, Mike Vranos’s Ellington dumped the biggest stake of the “upper crust” of funds followed by Insider Monkey, comprising close to $0.3 million in stock. Matthew Hulsizer’s fund, PEAK6 Capital Management, also dumped its stock, about $0.3 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Tredegar Corporation (NYSE:TG). These stocks are Collier Creek Holdings (NYSE:CCH), Diamond Hill Investment Group, Inc. (NASDAQ:DHIL), Sunlands Technology Group (NYSE:STG), and Kimball International Inc (NASDAQ:KBAL). This group of stocks’ market valuations are closest to TG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CCH | 16 | 139762 | 16 |
| DHIL | 7 | 40494 | 0 |
| STG | 2 | 959 | -3 |
| KBAL | 10 | 89826 | -2 |
| Average | 8.75 | 67760 | 2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $68 million in TG’s case. Collier Creek Holdings (NYSE:CCH) is the most popular stock in this table. On the other hand Sunlands Technology Group (NYSE:STG) is the least popular one with only 2 bullish hedge fund positions. Tredegar Corporation (NYSE:TG) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately TG wasn’t nearly as popular as these 15 stock and hedge funds that were betting on TG were disappointed as the stock returned 13.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
