Is THO Stock A Buy or Sell?

In this article we will check out the progression of hedge fund sentiment towards Thor Industries, Inc. (NYSE:THO) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is THO stock a buy? Hedge funds were becoming less confident. The number of long hedge fund positions fell by 15 lately. Thor Industries, Inc. (NYSE:THO) was in 24 hedge funds’ portfolios at the end of December. The all time high for this statistic is 42. Our calculations also showed that THO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the eyes of most stock holders, hedge funds are assumed to be unimportant, old financial tools of the past. While there are more than 8000 funds trading at present, We hone in on the leaders of this club, approximately 850 funds. It is estimated that this group of investors orchestrate the lion’s share of the hedge fund industry’s total capital, and by following their finest picks, Insider Monkey has spotted numerous investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website.

Ken Heebner of Capital Growth Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now 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 look at the new hedge fund action surrounding Thor Industries, Inc. (NYSE:THO).

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

At the end of the fourth quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -38% from the previous quarter. By comparison, 30 hedge funds held shares or bullish call options in THO a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

The largest stake in Thor Industries, Inc. (NYSE:THO) was held by Impala Asset Management, which reported holding $24.7 million worth of stock at the end of December. It was followed by Capital Growth Management with a $20.9 million position. Other investors bullish on the company included Citadel Investment Group, Arrowstreet Capital, and AQR Capital Management. In terms of the portfolio weights assigned to each position Value Holdings LP allocated the biggest weight to Thor Industries, Inc. (NYSE:THO), around 4.74% of its 13F portfolio. Tontine Asset Management is also relatively very bullish on the stock, setting aside 2.58 percent of its 13F equity portfolio to THO.

Seeing as Thor Industries, Inc. (NYSE:THO) has faced declining sentiment from hedge fund managers, it’s safe to say that there is a sect of hedge funds who were dropping their full holdings by the end of the fourth quarter. Intriguingly, Alexander Mitchell’s Scopus Asset Management cut the largest investment of the 750 funds watched by Insider Monkey, valued at an estimated $59.5 million in stock. Chuck Royce’s fund, Royce & Associates, also dumped its stock, about $6.2 million worth. These transactions are important to note, as total hedge fund interest was cut by 15 funds by the end of the fourth quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Thor Industries, Inc. (NYSE:THO) but similarly valued. These stocks are First Financial Bankshares Inc (NASDAQ:FFIN), Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), South State Corporation (NASDAQ:SSB), BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ), Douglas Emmett, Inc. (NYSE:DEI), Eidos Therapeutics, Inc. (NASDAQ:EIDX), and Concentrix Corporation (NASDAQ:CNXC). This group of stocks’ market valuations match THO’s market valuation.

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As you can see these stocks had an average of 22.4 hedge funds with bullish positions and the average amount invested in these stocks was $359 million. That figure was $205 million in THO’s case. Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) is the most popular stock in this table. On the other hand First Financial Bankshares Inc (NASDAQ:FFIN) is the least popular one with only 12 bullish hedge fund positions. Thor Industries, Inc. (NYSE:THO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for THO is 29.4. 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. 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 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on THO as the stock returned 52.4% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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