Is TKR Stock A Buy or Sell?

In this article you are going to find out whether hedge funds think The Timken Company (NYSE:TKR) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is TKR stock a buy? Hedge fund interest in The Timken Company (NYSE:TKR) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that TKR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). At the end of this article we will also compare TKR to other stocks including MSA Safety Incorporated (NYSE:MSA), 1Life Healthcare, Inc. (NASDAQ:ONEM), and Life Storage, Inc. (NYSE:LSI) to get a better sense of its popularity.

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Andrew Sandler of Sandler Capital Management

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

At fourth quarter’s end, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TKR over the last 22 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, AQR Capital Management, managed by Cliff Asness, holds the number one position in The Timken Company (NYSE:TKR). AQR Capital Management has a $65.6 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Columbus Circle Investors, led by Principal Global Investors, holding a $33.1 million position; 1.5% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Alexander Mitchell’s Scopus Asset Management and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Columbus Circle Investors allocated the biggest weight to The Timken Company (NYSE:TKR), around 1.45% of its 13F portfolio. Jade Capital Advisors is also relatively very bullish on the stock, dishing out 1.43 percent of its 13F equity portfolio to TKR.

Seeing as The Timken Company (NYSE:TKR) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedgies who were dropping their entire stakes last quarter. It’s worth mentioning that Thomas Bailard’s Bailard Inc cut the biggest investment of all the hedgies followed by Insider Monkey, worth an estimated $0.4 million in stock. Renee Yao’s fund, Neo Ivy Capital, also dropped its stock, about $0.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as The Timken Company (NYSE:TKR) but similarly valued. These stocks are MSA Safety Incorporated (NYSE:MSA), 1Life Healthcare, Inc. (NASDAQ:ONEM), Life Storage, Inc. (NYSE:LSI), BRP Inc. (NASDAQ:DOOO), Columbia Sportswear Company (NASDAQ:COLM), Elbit Systems Ltd. (NASDAQ:ESLT), and Halozyme Therapeutics, Inc. (NASDAQ:HALO). All of these stocks’ market caps are similar to TKR’s market cap.

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As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $210 million. That figure was $265 million in TKR’s case. 1Life Healthcare, Inc. (NASDAQ:ONEM) is the most popular stock in this table. On the other hand Elbit Systems Ltd. (NASDAQ:ESLT) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks The Timken Company (NYSE:TKR) is more popular among hedge funds. Our overall hedge fund sentiment score for TKR is 80.5. 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 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Unfortunately TKR wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on TKR were disappointed as the stock returned 6.6% since the end of the fourth quarter (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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