The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 28 holdings, data that is available nowhere else. Should you consider Timkensteel Corporation (NYSE:TMST) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Timkensteel Corporation (NYSE:TMST) has seen an increase in hedge fund interest in recent months. Our calculations also showed that TMST isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike other investors who track every movement of the 25 largest hedge funds, our long-short investment strategy relies on hedge fund buy/sell signals given by the 100 best performing hedge funds. Let’s go over the fresh hedge fund action encompassing Timkensteel Corporation (NYSE:TMST).
How have hedgies been trading Timkensteel Corporation (NYSE:TMST)?
At Q2’s end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 23% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TMST over the last 16 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Luminus Management held the most valuable stake in Timkensteel Corporation (NYSE:TMST), which was worth $26.5 million at the end of the second quarter. On the second spot was GAMCO Investors which amassed $13.1 million worth of shares. Moreover, Royce & Associates, D E Shaw, and Bronson Point Partners were also bullish on Timkensteel Corporation (NYSE:TMST), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, some big names have been driving this bullishness. Renaissance Technologies, initiated the largest position in Timkensteel Corporation (NYSE:TMST). Renaissance Technologies had $0.8 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $0.3 million position during the quarter. The following funds were also among the new TMST investors: John Overdeck and David Siegel’s Two Sigma Advisors, Ken Griffin’s Citadel Investment Group, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.
Let’s also examine hedge fund activity in other stocks similar to Timkensteel Corporation (NYSE:TMST). These stocks are J.C. Penney Company, Inc. (NYSE:JCP), Haverty Furniture Companies, Inc. (NYSE:HVT), Ciner Resources LP (NYSE:CINR), and Synchronoss Technologies, Inc. (NASDAQ:SNCR). All of these stocks’ market caps are similar to TMST’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JCP | 12 | 33842 | -1 |
| HVT | 9 | 53997 | -2 |
| CINR | 1 | 5332 | 0 |
| SNCR | 8 | 34919 | -4 |
| Average | 7.5 | 32023 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $55 million in TMST’s case. J.C. Penney Company, Inc. (NYSE:JCP) is the most popular stock in this table. On the other hand Ciner Resources LP (NYSE:CINR) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Timkensteel Corporation (NYSE:TMST) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately TMST wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TMST were disappointed as the stock returned -22.6% during the third quarter 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 in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
