Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index returned about 5.2% during the last 12 months ending October 30th. Less than 49% of the stocks in the index outperformed the index. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 30 S&P 500 stocks among hedge funds at the end of September 2014 had an average return of 9.5% during the same period. Sixty three percent of these 30 stocks outperformed the market. Hedge funds had bad stock picks like everyone else. Micron, which lost 50% over this period, was one of hedge funds’ 30 favorite S&P 500 stocks. Anadarko Petroleum was another failed stock pick which lost more than 26%. So, taking cues from hedge funds isn’t a foolproof strategy, but it seems to work on average. In this article, we will take a look at what hedge funds think about Tower International Inc (NYSE:TOWR).
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Is Tower International Inc (NYSE:TOWR) going to take off soon? Money managers are taking a bearish view. The number of long hedge fund positions went down by 2 recently. Tower International Inc (NYSE:TOWR) was in 18 hedge funds’ portfolio at the end of September. There were 20 hedge funds in our database with Tower International Inc (NYSE:TOWR) holdings at the end of the previous quarter. At the end of this article, we will also compare Tower International Inc (NYSE:TOWR) to other stocks including Sagent Pharmaceuticals Inc (NASDAQ:SGNT), The Spectranetics Corporation (NASDAQ:SPNC), and Kansas City Life Insurance Co (NASDAQ:KCLI) to get a better sense of the its popularity.
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What have hedge funds been doing with Tower International Inc (NYSE:TOWR)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long in this stock, a decline of 10% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully.
Blue Mountain Capital, managed by Andrew Feldstein and Stephen Siderow, holds the largest position in Tower International Inc (NYSE:TOWR). Blue Mountain Capital has a $29.5 million position in the stock, comprising 0.5% of its 13F portfolio. The second largest stake is held by Royce & Associates, managed by Chuck Royce, which held a $10.4 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedgies with similar optimism contain Andy Redleaf’s Whitebox Advisors, D E Shaw and Israel Englander’s Millennium Management.
Because Tower International Inc (NYSE:TOWR) has faced declining sentiment from hedge fund managers, logic holds that there were a few money managers that elected to cut their full holdings in third quarter. It’s worth mentioning that Richard S. Meisenberg’s ACK Asset Management dropped the biggest position of all the hedgies monitored by Insider Monkey, worth about $8.1 million in stock. Matthew Halbower’s fund, Pentwater Capital Management, also said goodbye to its stock, about $3.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 2 funds in third quarter.
Let’s also examine hedge fund activity in other stocks similar to Tower International Inc (NYSE:TOWR). We will take a look at Sagent Pharmaceuticals Inc (NASDAQ:SGNT), The Spectranetics Corporation (NASDAQ:SPNC), Kansas City Life Insurance Co (NASDAQ:KCLI), and Lumenis Ltd (NASDAQ:LMNS). This group of stocks’ market values are similar to Tower International Inc (NYSE:TOWR)’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SGNT | 10 | 62706 | -8 |
| SPNC | 24 | 148646 | 2 |
| KCLI | 4 | 4813 | 3 |
| LMNS | 7 | 12293 | -4 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. The Spectranetics Corporation (NASDAQ:SPNC) is the most popular stock in this table. On the other hand Kansas City Life Insurance Co (NASDAQ:KCLI) is the least popular one with only 4 bullish hedge fund positions. Tower International Inc (NYSE:TOWR) 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. In this regard The Spectranetics Corporation (NASDAQ:SPNC) might be a better candidate to consider a long position.
