We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Teekay Tankers Ltd. (NYSE:TNK) and what that likely means for the prospects of the company and its stock.
Is Teekay Tankers Ltd. (NYSE:TNK) the right pick for your portfolio? It looks like hedge funds are taking a pessimistic view. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings retreated by five last quarter. In this way, there were nine hedge funds in our database with TNK holdings 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 Forestar Group Inc. (NYSE:FOR), Carriage Services, Inc. (NYSE:CSV), and Financial Institutions, Inc. (NASDAQ:FISI) to gather more data points.
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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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With all of this in mind, let’s take a gander at the new action encompassing Teekay Tankers Ltd. (NYSE:TNK).
How are hedge funds trading Teekay Tankers Ltd. (NYSE:TNK)?
At the end of the third quarter, nine hedge funds tracked by Insider Monkey were bullish on this stock, a down by 36% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TNK over the last five quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Huber Capital Management, led by Joe Huber, holds the largest position in Teekay Tankers Ltd. (NYSE:TNK). Huber Capital Management has a $47.8 million position in the stock, comprising 1.9% of its 13F portfolio. Coming in second is Daniel Gold’s QVT Financial holding a $9.2 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions consist of Jon Bauer’s Contrarian Capital, Renaissance Technologies, one of the largest hedge funds in the world, and Joel Greenblatt’s Gotham Asset Management. We should note that none of these hedge funds are 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.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that sold off their entire stakes in the stock during the third quarter. At the top of the heap, John Fichthorn’s Dialectic Capital Management sold off the biggest stake of the “upper crust” of funds studied by Insider Monkey, totaling an estimated $1.1 million in stock, and Paul Tudor Jones’ Tudor Investment Corp was right behind this move, as the fund cut about $0.3 million worth of shares.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Teekay Tankers Ltd. (NYSE:TNK) but similarly valued. We will take a look at Forestar Group Inc. (NYSE:FOR), Carriage Services, Inc. (NYSE:CSV), Financial Institutions, Inc. (NASDAQ:FISI), and Capital Product Partners L.P. (NASDAQ:CPLP). All of these stocks’ market caps match TNK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FOR | 15 | 109808 | 5 |
| CSV | 9 | 21241 | 0 |
| FISI | 5 | 8111 | 0 |
| CPLP | 4 | 5498 | 0 |
As you can see these stocks had an average of eight hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $62 million in TNK’s case. Forestar Group Inc. (NYSE:FOR) is the most popular stock in this table. On the other hand Capital Product Partners L.P. (NASDAQ:CPLP) is the least popular one with only four bullish hedge fund positions. Teekay Tankers Ltd. (NYSE:TNK) 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. In this regard FOR might be a better candidate to consider taking a long position in.
Disclosure: none
