We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 835 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Thor Industries, Inc. (NYSE:THO), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Thor Industries, Inc. (NYSE:THO) shares haven’t seen a lot of action during the fourth quarter. Overall, hedge fund sentiment was unchanged. The stock was in 30 hedge funds’ portfolios at the end of the fourth quarter of 2019. At the end of this article we will also compare THO to other stocks including Murphy Oil Corporation (NYSE:MUR), Parsons Corporation (NYSE:PSN), and Univar Inc (NYSE:UNVR) to get a better sense of its popularity.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s analyze the key hedge fund action encompassing Thor Industries, Inc. (NYSE:THO).
What does smart money think about Thor Industries, Inc. (NYSE:THO)?
At Q4’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards THO over the last 18 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, Capital Growth Management held the most valuable stake in Thor Industries, Inc. (NYSE:THO), which was worth $70.5 million at the end of the third quarter. On the second spot was Millennium Management which amassed $30.3 million worth of shares. Ancient Art (Teton Capital), Voss Capital, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Capital Growth Management allocated the biggest weight to Thor Industries, Inc. (NYSE:THO), around 5.7% of its 13F portfolio. Albar Capital is also relatively very bullish on the stock, designating 5.15 percent of its 13F equity portfolio to THO.
Due to the fact that Thor Industries, Inc. (NYSE:THO) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few fund managers that decided to sell off their positions entirely in the third quarter. Interestingly, Adam Peterson’s Magnolia Capital Fund said goodbye to the biggest stake of the “upper crust” of funds followed by Insider Monkey, worth an estimated $12.2 million in stock. Ryan Tolkin (CIO)’s fund, Schonfeld Strategic Advisors, also dropped its stock, about $1.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to Thor Industries, Inc. (NYSE:THO). These stocks are Murphy Oil Corporation (NYSE:MUR), Parsons Corporation (NYSE:PSN), Univar Inc (NYSE:UNVR), and Foot Locker, Inc. (NYSE:FL). This group of stocks’ market values are closest to THO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MUR | 24 | 161932 | 6 |
| PSN | 10 | 94767 | -3 |
| UNVR | 43 | 1536284 | 5 |
| FL | 29 | 426619 | -5 |
| Average | 26.5 | 554901 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $555 million. That figure was $247 million in THO’s case. Univar Inc (NYSE:UNVR) is the most popular stock in this table. On the other hand Parsons Corporation (NYSE:PSN) is the least popular one with only 10 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. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately THO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on THO were disappointed as the stock returned -44.2% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
