Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Turquoise Hill Resources Ltd (NYSE:TRQ) investors should pay attention to a decrease in hedge fund interest in recent months. TRQ was in 18 hedge funds’ portfolios at the end of the third quarter of 2016. There were 20 hedge funds in our database with TRQ positions at the end of the previous quarter. At the end of this article we will also compare TRQ to other stocks including EQT GP Holdings LP (NYSE:EQGP), Carlisle Companies, Inc. (NYSE:CSL), and Equity Lifestyle Properties, Inc. (NYSE:ELS) to get a better sense of its popularity.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.
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Keeping this in mind, we’re going to take a look at the new action regarding Turquoise Hill Resources Ltd (NYSE:TRQ).
What have hedge funds been doing with Turquoise Hill Resources Ltd (NYSE:TRQ)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a reduction of 10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TRQ over the last 5 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Matthew Halbower’s Pentwater Capital Management has the most valuable position in Turquoise Hill Resources Ltd (NYSE:TRQ), worth close to $282.2 million, accounting for 2.6% of its total 13F portfolio. The second largest stake is held by Anchor Bolt Capital, led by Robert Polak, holding a $53.2 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Some other peers that are bullish encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, David Iben’s Kopernik Global Investors and Gifford Combs’s Dalton Investments. We should note that Kopernik Global Investors is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Due to the fact that Turquoise Hill Resources Ltd (NYSE:TRQ) has encountered falling interest from the aggregate hedge fund industry, it’s easy to see that there was a specific group of money managers that elected to cut their positions entirely by the end of the third quarter. Intriguingly, Steve Cohen’s Point72 Asset Management cut the largest position of the 700 funds studied by Insider Monkey, comprising an estimated $3.8 million in stock. Ken Griffin’s fund, Citadel Investment Group, also dumped its stock, about $2.2 million worth of shares.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Turquoise Hill Resources Ltd (NYSE:TRQ) but similarly valued. These stocks are EQT GP Holdings LP (NYSE:EQGP), Carlisle Companies, Inc. (NYSE:CSL), Equity Lifestyle Properties, Inc. (NYSE:ELS), and News Corp (NASDAQ:NWS). This group of stocks’ market caps match TRQ’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EQGP | 3 | 24730 | -1 |
| CSL | 24 | 362307 | 2 |
| ELS | 11 | 271254 | -3 |
| NWS | 16 | 200879 | 2 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $215 million. That figure was $469 million in TRQ’s case. Carlisle Companies, Inc. (NYSE:CSL) is the most popular stock in this table. On the other hand EQT GP Holdings LP (NYSE:EQGP) is the least popular one with only 3 bullish hedge fund positions. Turquoise Hill Resources Ltd (NYSE:TRQ) 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 CSL might be a better candidate to consider taking a long position in.
Disclosure: none.
