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Are Hedge Funds Betting on Terex Corporation (TEX)?

We can judge whether Terex Corporation (NYSE:TEX) 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, research shows that these picks historically outperformed the market when we factor in known risk factors.

Terex Corporation (NYSE:TEX) was in 23 hedge funds’ portfolios at the end of the third quarter of 2015. Terex Corporation (NYSE:TEX) shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 28 hedge funds in our database with Terex Corporation (NYSE:TEX) holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Knight Transportation (NYSE:KNX), The New York Times Company (NYSE:NYT), and Xenia Hotels & Resorts Inc (NYSE:XHR) to gather more data points.

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Today there are dozens of metrics market participants can use to evaluate publicly traded companies. A couple of the most useful metrics are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can outclass the S&P 500 by a solid margin (see the details here).

With all of this in mind, let’s go over the key action encompassing Terex Corporation (NYSE:TEX).

What does the smart money think about Terex Corporation (NYSE:TEX)?

Heading into Q4, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 18% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Richard S. Pzena’s Pzena Investment Management has the biggest position in Terex Corporation (NYSE:TEX), worth close to $77.8 million, accounting for 0.5% of its total 13F portfolio. The second largest stake is held by Millennium Management, led by Israel Englander, holding an $29.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions contain David Tepper’s Appaloosa Management LP, D E Shaw and Ron Gutfleish’s Elm Ridge Capital.

Due to the fact that Terex Corporation (NYSE:TEX) has witnessed a declining sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few money managers who sold off their entire stakes last quarter. Intriguingly, Alexander Roepers’ Atlantic Investment Management dropped the largest position of the 700 funds followed by Insider Monkey, worth about $21 million in CALL options. Clint Murray’s fund, Lodge Hill Capital, also sold off its CALL options, about $11.6 million worth. These moves are important to note, as total hedge fund interest was cut by 5 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Terex Corporation (NYSE:TEX) but similarly valued. These stocks are Knight Transportation (NYSE:KNX), The New York Times Company (NYSE:NYT), Xenia Hotels & Resorts Inc (NYSE:XHR), and Grupo Aeroportuario del Centro Nort(ADR) (NASDAQ:OMAB). All of these stocks’ market caps are closest to Terex Corporation (NYSE:TEX)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KNX 19 81449 -3
NYT 18 247699 4
XHR 13 56086 -3
OMAB 5 19358 0

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 $101 million, versus $256 million in Terex Corporation (NYSE:TEX)’s case. Knight Transportation (NYSE:KNX) is the most popular stock in this table and Terex Corporation (NYSE:TEX) has even more funds from our database bullish on it. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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