Is Turquoise Hill Resources Ltd (NYSE:TRQ) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Turquoise Hill Resources Ltd (NYSE:TRQ) has experienced a decrease in activity from the world’s largest hedge funds of late. Our calculations also showed that TRQ isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a lot of gauges shareholders use to grade their stock investments. Two of the most innovative gauges are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the best money managers can outclass the S&P 500 by a significant amount (see the details here).
Let’s take a look at the recent hedge fund action surrounding Turquoise Hill Resources Ltd (NYSE:TRQ).
What does the smart money think about Turquoise Hill Resources Ltd (NYSE:TRQ)?
At the end of the fourth quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TRQ over the last 14 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Among these funds, SailingStone Capital Partners held the most valuable stake in Turquoise Hill Resources Ltd (NYSE:TRQ), which was worth $434.2 million at the end of the third quarter. On the second spot was Pentwater Capital Management which amassed $250.5 million worth of shares. Moreover, Kopernik Global Investors, Luminus Management, and Dalton Investments were also bullish on Turquoise Hill Resources Ltd (NYSE:TRQ), allocating a large percentage of their portfolios to this stock.
Since Turquoise Hill Resources Ltd (NYSE:TRQ) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there were a few funds that elected to cut their entire stakes heading into Q3. Interestingly, Jorge Paulo Lemann’s 3G Capital sold off the biggest investment of all the hedgies tracked by Insider Monkey, worth about $6.4 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund said goodbye to about $1.6 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds heading into Q3.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Turquoise Hill Resources Ltd (NYSE:TRQ) but similarly valued. These stocks are Anaplan, Inc. (NYSE:PLAN), Marriott Vacations Worldwide Corporation (NYSE:VAC), Churchill Downs Incorporated (NASDAQ:CHDN), and Eastgroup Properties Inc (NYSE:EGP). All of these stocks’ market caps are similar to TRQ’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PLAN | 21 | 442876 | 21 |
| VAC | 26 | 385657 | -6 |
| CHDN | 26 | 475766 | 0 |
| EGP | 7 | 25033 | 2 |
| Average | 20 | 332333 | 4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $332 million. That figure was $838 million in TRQ’s case. Marriott Vacations Worldwide Corporation (NYSE:VAC) is the most popular stock in this table. On the other hand Eastgroup Properties Inc (NYSE:EGP) is the least popular one with only 7 bullish hedge fund positions. Turquoise Hill Resources Ltd (NYSE:TRQ) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 TRQ wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); TRQ investors were disappointed as the stock returned -2.4% 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.
