Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 37.4% through the end of November and outperformed the broader market benchmark by 9.9 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Thor Industries, Inc. (NYSE:THO) investors should pay attention to an increase in enthusiasm from smart money of late. Our calculations also showed that THO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are a large number of indicators market participants use to evaluate publicly traded companies. A pair of the most under-the-radar indicators are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the best investment managers can outclass the market by a solid margin (see the details here).
Blair Levinsky of Waratah Capital Advisors
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s go over the fresh hedge fund action regarding Thor Industries, Inc. (NYSE:THO).
What does smart money think about Thor Industries, Inc. (NYSE:THO)?
At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 26% from one quarter earlier. By comparison, 28 hedge funds held shares or bullish call options in THO a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Citadel Investment Group was the largest shareholder of Thor Industries, Inc. (NYSE:THO), with a stake worth $56.6 million reported as of the end of September. Trailing Citadel Investment Group was Millennium Management, which amassed a stake valued at $35.9 million. Teton Capital, Renaissance Technologies, and Waratah Capital Advisors 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 Teton Capital allocated the biggest weight to Thor Industries, Inc. (NYSE:THO), around 3.35% of its portfolio. Sprott Asset Management is also relatively very bullish on the stock, dishing out 1.73 percent of its 13F equity portfolio to THO.
As one would reasonably expect, specific money managers have been driving this bullishness. Waratah Capital Advisors, managed by Brad Dunkley and Blair Levinsky, created the biggest position in Thor Industries, Inc. (NYSE:THO). Waratah Capital Advisors had $13.4 million invested in the company at the end of the quarter. Adam Peterson’s Magnolia Capital Fund also made a $12.2 million investment in the stock during the quarter. The other funds with brand new THO positions are Ken Heebner’s Capital Growth Management, Matthew Hulsizer’s PEAK6 Capital Management, and Lee Ainslie’s Maverick Capital.
Let’s now review hedge fund activity in other stocks similar to Thor Industries, Inc. (NYSE:THO). We will take a look at Cirrus Logic, Inc. (NASDAQ:CRUS), Liberty Latin America Ltd. (NASDAQ:LILA), Simpson Manufacturing Co, Inc. (NYSE:SSD), and Liberty Latin America Ltd. (NASDAQ:LILAK). This group of stocks’ market caps resemble THO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRUS | 24 | 373257 | 1 |
| LILA | 13 | 154267 | 2 |
| SSD | 13 | 215110 | -4 |
| LILAK | 20 | 375106 | -2 |
| Average | 17.5 | 279435 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $279 million. That figure was $222 million in THO’s case. Cirrus Logic, Inc. (NASDAQ:CRUS) is the most popular stock in this table. On the other hand Liberty Latin America Ltd. (NASDAQ:LILA) is the least popular one with only 13 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 calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on THO as the stock returned 13.3% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
