Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ recent losses in Facebook. Let’s take a closer look at what the funds we track think about Terex Corporation (NYSE:TEX) in this article.
Hedge fund interest in Terex Corporation (NYSE:TEX) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare TEX to other stocks including Colliers International Group Inc (NASDAQ:CIGI), Floor & Decor Holdings, Inc. (NYSE:FND), and Fulton Financial Corp (NASDAQ:FULT) to get a better sense of its popularity.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a look at the fresh hedge fund action surrounding Terex Corporation (NYSE:TEX).
What have hedge funds been doing with Terex Corporation (NYSE:TEX)?
Heading into the fourth quarter of 2018, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, representing no change from the second quarter of 2018. On the other hand, there were a total of 27 hedge funds with a bullish position in TEX at the beginning of this year. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in Terex Corporation (NYSE:TEX) was held by Pzena Investment Management, which reported holding $129.8 million worth of stock at the end of September. It was followed by Marcato Capital Management with a $115.6 million position. Other investors bullish on the company included Fisher Asset Management, AQR Capital Management, and Citadel Investment Group.
Because Terex Corporation (NYSE:TEX) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of hedgies that elected to cut their positions entirely heading into Q3. Interestingly, Christopher A. Winham’s Tide Point Capital sold off the largest stake of all the hedgies followed by Insider Monkey, worth an estimated $13.1 million in stock. Gregg Moskowitz’s fund, Interval Partners, also dumped its stock, about $4.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Terex Corporation (NYSE:TEX) but similarly valued. These stocks are Colliers International Group Inc (NASDAQ:CIGI), Floor & Decor Holdings, Inc. (NYSE:FND), Fulton Financial Corp (NASDAQ:FULT), and Vishay Intertechnology, Inc. (NYSE:VSH). All of these stocks’ market caps match TEX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CIGI | 11 | 274919 | 0 |
| FND | 25 | 278970 | 11 |
| FULT | 12 | 40945 | 4 |
| VSH | 22 | 459952 | 3 |
| Average | 17.5 | 263697 | 4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $264 million. That figure was $475 million in TEX’s case. Floor & Decor Holdings, Inc. (NYSE:FND) is the most popular stock in this table. On the other hand Colliers International Group Inc (NASDAQ:CIGI) is the least popular one with only 11 bullish hedge fund positions. Terex Corporation (NYSE:TEX) 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 FND might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
