Is Smart Money Losing Interest in Tata Motors Limited (ADR) (TTM)?

It was a rough third quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 7% during the quarter. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by about 14 percentage points between June 25 and October 30, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards Tata Motors Limited (ADR) (NYSE:TTM) during the quarter below.

Tata Motors Limited (ADR) (NYSE:TTM) was in 22 hedge funds’ portfolios at the end of the third quarter of 2015. TTM has seen an increase in hedge fund interest recently. There were 20 hedge funds in our database with TTM holdings at the end of the previous quarter. At the end of this article we will also compare TTM to other stocks including Tractor Supply Company (NASDAQ:TSCO), Cheniere Energy, Inc. (NYSEAMEX:LNG), and Agilent Technologies Inc. (NYSE:A) to get a better sense of its popularity.

In today’s marketplace, there are many methods investors have at their disposal to value publicly traded companies. Two of the most underrated methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can trounce the broader indices by a significant margin (see the details here).

With all of this in mind, let’s take a glance at the fresh action regarding Tata Motors Limited (ADR) (NYSE:TTM).

Hedge fund activity in Tata Motors Limited (ADR) (NYSE:TTM)

At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Fisher’s Fisher Asset Management has the number one position in Tata Motors Limited (ADR) (NYSE:TTM), worth close to $182.8 million, accounting for 0.4% of its total 13F portfolio. The second most bullish fund manager is AQR Capital Management, managed by Cliff Asness, which holds an $103.7 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish include Simon Sadler’s Segantii Capital, Daniel S. Och’s OZ Management and Israel Englander’s Millennium Management.

As aggregate interest increased, specific money managers were leading the bulls’ herd. Indus Capital, managed by David Kowitz and Sheldon Kasowitz, established a position in Tata Motors Limited (ADR) (NYSE:TTM). Indus Capital had $9.9 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $5.5 million investment in the stock during the quarter. The other funds with new positions in the stock are D. E. Shaw’s D E Shaw, Noam Gottesman’s GLG Partners, and Alexander Roepers’s Atlantic Investment Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Tata Motors Limited (ADR) (NYSE:TTM) but similarly valued. These stocks are Tractor Supply Company (NASDAQ:TSCO), Cheniere Energy, Inc. (NYSEAMEX:LNG), Agilent Technologies Inc. (NYSE:A), and Freescale Semiconductor Ltd (NYSE:FSL). This group of stocks’ market valuations match TTM’s market valuation.

As you can see these stocks had an average of 40 hedge funds with bullish positions and the average amount invested in these stocks was $2284 million. That figure was $431 million in TTM’s case. Cheniere Energy, Inc. (NYSEAMEX:LNG is the most popular stock in this table. On the other hand Freescale Semiconductor Ltd (NYSE:FSL) is the least popular one with only 23 bullish hedge fund positions. In comparison, Tata Motors Limited (ADR) (NYSE:TTM), with 22 bullish hedge fund positions, is even less popular. Even though this is usually not a good sign, it doesn’t necessarily mean it is not a good choice for investment. Investors might not be considering the bullish thesis when they think of this stock as overvalued. In any case, further research and more detailed analyses are required.