Is TPIC Stock A Buy or Sell?

In this article we will analyze whether TPI Composites, Inc. (NASDAQ:TPIC) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is TPIC stock a buy? Money managers were in a bullish mood. The number of long hedge fund bets increased by 7 recently. TPI Composites, Inc. (NASDAQ:TPIC) was in 27 hedge funds’ portfolios at the end of December. The all time high for this statistic is 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TPIC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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. Hedge funds have more than $3 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Richard Driehaus of Driehaus Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s go over the latest hedge fund action regarding TPI Composites, Inc. (NASDAQ:TPIC).

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

At fourth quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 35% from the previous quarter. By comparison, 20 hedge funds held shares or bullish call options in TPIC a year ago. 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, Greenvale Capital held the most valuable stake in TPI Composites, Inc. (NASDAQ:TPIC), which was worth $62.8 million at the end of the fourth quarter. On the second spot was Driehaus Capital which amassed $24.2 million worth of shares. Scopus Asset Management, Adage Capital Management, and Electron Capital Partners 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 Greenvale Capital allocated the biggest weight to TPI Composites, Inc. (NASDAQ:TPIC), around 6.02% of its 13F portfolio. Quaero Capital is also relatively very bullish on the stock, setting aside 4.71 percent of its 13F equity portfolio to TPIC.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into TPI Composites, Inc. (NASDAQ:TPIC) headfirst. Scopus Asset Management, managed by Alexander Mitchell, created the largest position in TPI Composites, Inc. (NASDAQ:TPIC). Scopus Asset Management had $19.6 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $13.2 million position during the quarter. The other funds with brand new TPIC positions are Philip Best’s Quaero Capital, Till Bechtolsheimer’s Arosa Capital Management, and Peter Algert’s Algert Global.

Let’s check out hedge fund activity in other stocks similar to TPI Composites, Inc. (NASDAQ:TPIC). These stocks are Revance Therapeutics Inc (NASDAQ:RVNC), Edgewell Personal Care Company (NYSE:EPC), Amarin Corporation plc (NASDAQ:AMRN), Boise Cascade Co (NYSE:BCC), O-I Glass, Inc. (NYSE:OI), InterDigital, Inc. (NASDAQ:IDCC), and Belden Inc. (NYSE:BDC). This group of stocks’ market valuations are closest to TPIC’s market valuation.

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As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $225 million. That figure was $214 million in TPIC’s case. O-I Glass, Inc. (NYSE:OI) is the most popular stock in this table. On the other hand Revance Therapeutics Inc (NASDAQ:RVNC) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks TPI Composites, Inc. (NASDAQ:TPIC) is more popular among hedge funds. Our overall hedge fund sentiment score for TPIC is 90. 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 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Unfortunately TPIC wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on TPIC were disappointed as the stock returned -7.7% since the end of the fourth quarter (through 4/19) 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.