Is TECK Stock A Buy or Sell?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Teck Resources Ltd (NYSE:TECK).

Is TECK stock a buy? Teck Resources Ltd (NYSE:TECK) was in 31 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 41. TECK shareholders have witnessed an increase in hedge fund interest lately. There were 27 hedge funds in our database with TECK positions at the end of the third quarter. Our calculations also showed that TECK isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Scott Bessent of Key Square Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s take a gander at the latest hedge fund action encompassing Teck Resources Ltd (NYSE:TECK).

Do Hedge Funds Think TECK Is A Good Stock To Buy Now?

At the end of December, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards TECK over the last 22 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.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the biggest position in Teck Resources Ltd (NYSE:TECK), worth close to $220 million, corresponding to 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Contrarius Investment Management, led by Stephen Mildenhall, holding a $130.3 million position; 8.1% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism contain Josh Donfeld and David Rogers’s Castle Hook Partners, Scott Bessent’s Key Square Capital Management and Stanley Druckenmiller’s Duquesne Capital. In terms of the portfolio weights assigned to each position Key Square Capital Management allocated the biggest weight to Teck Resources Ltd (NYSE:TECK), around 15.54% of its 13F portfolio. Contrarius Investment Management is also relatively very bullish on the stock, dishing out 8.08 percent of its 13F equity portfolio to TECK.

Consequently, key hedge funds have been driving this bullishness. Anomaly Capital Management, managed by Ben Jacobs, created the biggest position in Teck Resources Ltd (NYSE:TECK). Anomaly Capital Management had $44.2 million invested in the company at the end of the quarter. William Harnisch’s Peconic Partners LLC also initiated a $29 million position during the quarter. The following funds were also among the new TECK investors: Steven Tananbaum’s GoldenTree Asset Management, Michel Massoud’s Melqart Asset Management, and Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors.

Let’s also examine hedge fund activity in other stocks similar to Teck Resources Ltd (NYSE:TECK). These stocks are BanColombia S.A. (NYSE:CIB), American Airlines Group Inc (NASDAQ:AAL), Amedisys Inc (NASDAQ:AMED), Vistra Corp. (NYSE:VST), Lear Corporation (NYSE:LEA), Henry Schein, Inc. (NASDAQ:HSIC), and GFL Environmental Inc. (NYSE:GFL). All of these stocks’ market caps are similar to TECK’s market cap.

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As you can see these stocks had an average of 26.7 hedge funds with bullish positions and the average amount invested in these stocks was $710 million. That figure was $798 million in TECK’s case. Vistra Corp. (NYSE:VST) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 4 bullish hedge fund positions. Teck Resources Ltd (NYSE:TECK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TECK is 70.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and beat the market again by 1.5 percentage points. Unfortunately TECK wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on TECK were disappointed as the stock returned 7.4% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.