Were Hedge Funds Right About Teck Resources Ltd (TECK)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Teck Resources Ltd (NYSE:TECK) and determine whether hedge funds skillfully traded this stock.

Is Teck Resources Ltd (NYSE:TECK) going to take off soon? The best stock pickers were in an optimistic mood. The number of bullish hedge fund bets inched up by 1 lately. Teck Resources Ltd (NYSE:TECK) was in 41 hedge funds’ portfolios at the end of September. The all time high for this statistic is 41. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TECK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s check out the fresh hedge fund action regarding Teck Resources Ltd (NYSE:TECK).

David Einhorn of Greenlight Capital

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

At Q3’s end, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the second quarter of 2021. On the other hand, there were a total of 27 hedge funds with a bullish position in TECK a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Antipodes Partners, managed by Jacob Mitchell, holds the largest position in Teck Resources Ltd (NYSE:TECK). Antipodes Partners has a $179.7 million position in the stock, comprising 6.1% of its 13F portfolio. Sitting at the No. 2 spot is Contrarius Investment Management, managed by Stephen Mildenhall, which holds a $179.3 million position; the fund has 9.2% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism include Josh Donfeld and David Rogers’s Castle Hook Partners, David Einhorn’s Greenlight Capital and David Cohen and Harold Levy’s Iridian Asset Management. In terms of the portfolio weights assigned to each position Contrarius Investment Management allocated the biggest weight to Teck Resources Ltd (NYSE:TECK), around 9.19% of its 13F portfolio. Greenlight Capital is also relatively very bullish on the stock, dishing out 7.56 percent of its 13F equity portfolio to TECK.

As one would reasonably expect, key money managers have been driving this bullishness. Masters Capital Management, managed by Mike Masters, initiated the biggest call position in Teck Resources Ltd (NYSE:TECK). Masters Capital Management had $49.8 million invested in the company at the end of the quarter. Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors also made a $49.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Alexander Mitchell’s Scopus Asset Management, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Mark R. Freeman’s Socorro Asset Management.

Let’s now take a look at hedge fund activity in other stocks similar to Teck Resources Ltd (NYSE:TECK). We will take a look at Open Text Corporation (NASDAQ:OTEX), Crown Holdings, Inc. (NYSE:CCK), Athene Holding Ltd. (NYSE:ATH), Icahn Enterprises LP (NASDAQ:IEP), CBOE Global Markets Inc (NASDAQ:CBOE), Williams-Sonoma, Inc. (NYSE:WSM), and Advance Auto Parts, Inc. (NYSE:AAP). This group of stocks’ market values are closest to TECK’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $2741 million. That figure was $1319 million in TECK’s case. Crown Holdings, Inc. (NYSE:CCK) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 4 bullish hedge fund positions. Teck Resources Ltd (NYSE:TECK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TECK is 74.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on TECK as the stock returned 24.1% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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