Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze Texas Pacific Land Trust (NYSE:TPL) from the perspective of those successful funds.
Is Texas Pacific Land Trust (NYSE:TPL) going to take off soon? At the end of September, seven funds tracked by us amassed long positions in the company. 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 MicroStrategy Incorporated (NASDAQ:MSTR), Deckers Outdoor Corp (NASDAQ:DECK), and Fortress Investment Group LLC (NYSE:FIG) to gather more data points.
Follow Texas Pacific Land Trust (NYSE:TPL)
Follow Texas Pacific Land Trust (NYSE:TPL)
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 go over the fresh action surrounding Texas Pacific Land Trust (NYSE:TPL).
What have hedge funds been doing with Texas Pacific Land Trust (NYSE:TPL)?
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock. Let’s take a closer look at some funds that ranked among the largest shareholders of the company.
According to Insider Monkey’s hedge fund database, Horizon Asset Management, led by Murray Stahl, holds the largest position in Texas Pacific Land Trust (NYSE:TPL). Horizon Asset Management has a $402.8 million position in the stock, comprising 11.3% of its 13F portfolio. On Horizon Asset Management’s heels is Arbiter Partners Capital Management, led by Paul J. Isaac, holding a $35.4 million position; the fund has 4.2% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish encompass Ed Beddow and William Tichy’s Beddow Capital Management, Phil Frohlich’s Prescott Group Capital Management, and Glenn Russell Dubin’s Highbridge Capital Management. We should note that Arbiter Partners Capital 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.
On the next page, we are going to see how TPL stacks up against four other companies with similar market caps.
Let’s now review hedge fund activity in other stocks similar to Texas Pacific Land Trust (NYSE:TPL). These stocks are MicroStrategy Incorporated (NASDAQ:MSTR), Deckers Outdoor Corp (NASDAQ:DECK), Fortress Investment Group LLC (NYSE:FIG), and Qunar Cayman Islands Ltd (NASDAQ:QUNR). This group of stocks’ market valuations resemble TPL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MSTR | 23 | 306704 | -3 |
| DECK | 17 | 240981 | 2 |
| FIG | 21 | 100036 | -2 |
| QUNR | 7 | 10274 | 0 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $164 million. That figure was $444 million in TPL’s case. MicroStrategy Incorporated (NASDAQ:MSTR) is the most popular stock in this table. On the other hand Qunar Cayman Islands Ltd (NASDAQ:QUNR) is the least popular one with only seven bullish hedge fund positions. Compared to these stocks Texas Pacific Land Trust (NYSE:TPL) registered the same number of bullish investors as QUNR. Considering that hedge funds aren’t fond of this stock in relation to the majority of the other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: none
