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 TIM Participacoes SA (ADR) (NYSE:TSU) from the perspective of those successful funds.
Is TIM Participacoes SA (ADR) (NYSE:TSU) a healthy stock for your portfolio? Investors who are in the know are definitely getting less bullish. The number of long hedge fund investments retreated by 3 in recent months. TSU was in 13 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with TSU positions at the end of the previous quarter. At the end of this article we will also compare TSU to other stocks including Liberty Property Trust (NYSE:LPT), Pinnacle Foods Inc (NYSE:PF), and The Ultimate Software Group, Inc. (NASDAQ:ULTI) to get a better sense of its popularity.
Follow Tim Participacoes S A (NYSE:TSU)
Follow Tim Participacoes S A (NYSE:TSU)
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
Dean Drobot/Shutterstock.com
What does the smart money think about TIM Participacoes SA (ADR) (NYSE:TSU)?
Heading into the fourth quarter of 2016, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 19% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in TSU at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Elliott Management, led by Paul Singer, holds the biggest position in TIM Participacoes SA (ADR) (NYSE:TSU). Elliott Management has a $158.4 million position in the stock, comprising 1.3% of its 13F portfolio. Coming in second is Paulson & Co, led by John Paulson, which holds a $70 million position. Other members of the smart money that are bullish contain Brett Barakett’s Tremblant Capital, Ken Griffin’s Citadel Investment Group and Hari Hariharan’s NWI 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 cut their entire stakes in the stock during the third quarter. It’s worth mentioning that Rob Citrone’s Discovery Capital Management cut the biggest stake of all the investors watched by Insider Monkey, totaling close to $21.7 million in stock. Clint Carlson’s fund, Carlson Capital, also dumped its stock, about $2.2 million worth.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as TIM Participacoes SA (ADR) (NYSE:TSU) but similarly valued. We will take a look at Liberty Property Trust (NYSE:LPT), Pinnacle Foods Inc (NYSE:PF), The Ultimate Software Group, Inc. (NASDAQ:ULTI), and Harman International Industries Inc./DE/ (NYSE:HAR). All of these stocks’ market caps are similar to TSU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LPT | 14 | 77164 | -1 |
| PF | 41 | 1449617 | 8 |
| ULTI | 18 | 155448 | 3 |
| HAR | 33 | 606926 | 7 |
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $572 million. That figure was $327 million in TSU’s case. Pinnacle Foods Inc (NYSE:PF) is the most popular stock in this table. On the other hand Liberty Property Trust (NYSE:LPT) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks TIM Participacoes SA (ADR) (NYSE:TSU) is even less popular than LPT. Considering that hedge funds aren’t fond of this stock in relation to 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
