The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Teekay Offshore Partners L.P. (NYSE:TOO) from the perspective of those successful funds.
Teekay Offshore Partners L.P. (NYSE:TOO) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds’ portfolios at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Sun Hydraulics Corporation (NASDAQ:SNHY), Solar Capital Ltd. (NASDAQ:SLRC), and Apollo Group Inc (NASDAQ:APOL) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Now, let’s take a look at the fresh action surrounding Teekay Offshore Partners L.P. (NYSE:TOO).
How have hedgies been trading Teekay Offshore Partners L.P. (NYSE:TOO)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards TOO over the last 5 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.
When looking at the institutional investors followed by Insider Monkey, Alec Litowitz and Ross Laser’s Magnetar Capital has the biggest position in Teekay Offshore Partners L.P. (NYSE:TOO), worth close to $103.7 million, corresponding to 1.6% of its total 13F portfolio. Coming in second is Jonathan Barrett and Paul Segal of Luminus Management which holds a $5.6 million position. Other hedge funds and institutional investors that hold long positions consist of Steve Cohen’s Point72 Asset Management, Richard Mashaal’s Rima Senvest Management and Jim Simons’ Renaissance Technologies which is one of the largest hedge funds in the world. We should note that Luminus Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Judging by the fact that Teekay Offshore Partners L.P. (NYSE:TOO) has gone through staid sentiment from hedge fund managers, it’s safe to say that there was a specific group of hedgies that decided to sell off their positions entirely heading into Q4. At the top of the heap, John Overdeck and David Siegel’s Two Sigma Advisors cashed in the biggest stake of the 700 funds studied by Insider Monkey, valued at close to $0.2 million in stock. Ken Griffin’s fund, Citadel Investment Group, also cut its call options, about $0.1 million worth.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Teekay Offshore Partners L.P. (NYSE:TOO) but similarly valued. These stocks are Sun Hydraulics Corporation (NASDAQ:SNHY), Solar Capital Ltd. (NASDAQ:SLRC), Apollo Group Inc (NASDAQ:APOL), and PharMerica Corporation (NYSE:PMC). This group of stocks’ market values resemble TOO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SNHY | 5 | 95714 | -2 |
| SLRC | 11 | 42231 | 0 |
| APOL | 17 | 128024 | 1 |
| PMC | 14 | 65037 | -2 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $83 million. That figure was $119 million in TOO’s case. Apollo Group Inc (NASDAQ:APOL) is the most popular stock in this table. On the other hand Sun Hydraulics Corporation (NASDAQ:SNHY) is the least popular one with only 5 bullish hedge fund positions. Teekay Offshore Partners L.P. (NYSE:TOO) 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. In this regard APOL might be a better candidate to consider taking a long position in.
Disclosure: None
