To many of your peers, hedge funds are assumed to be overrated, outdated financial vehicles of a period lost to current times. Although there are more than 8,000 hedge funds trading today, Insider Monkey focuses on the aristocrats of this club, around 525 funds. Analysts calculate that this group has its hands on the lion’s share of all hedge funds’ total capital, and by keeping an eye on their highest quality picks, we’ve identified a few investment strategies that have historically outstripped the S&P 500. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Equally as crucial, positive insider trading activity is a second way to look at the stock market universe. Just as you’d expect, there are plenty of incentives for a bullish insider to downsize shares of his or her company, but only one, very simple reason why they would behave bullishly. Many academic studies have demonstrated the market-beating potential of this method if “monkeys” know where to look (learn more here).
Now that that’s out of the way, let’s study the recent info about Tenneco Inc (NYSE:TEN).
Hedge fund activity in Tenneco Inc (NYSE:TEN)
At the end of the second quarter, a total of 20 of the hedge funds we track were bullish in this stock, a change of -17% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes considerably.
Out of the hedge funds we follow, Mario Gabelli’s GAMCO Investors had the most valuable position in Tenneco Inc (NYSE:TEN), worth close to $48.4 million, accounting for 0.3% of its total 13F portfolio. Coming in second is Diamond Hill Capital, managed by Ric Dillon, which held a $38.2 million position; 0.4% of its 13F portfolio is allocated to the stock. Other hedgies that are bullish include Phill Gross and Robert Atchinson’s Adage Capital Management, and D. E. Shaw’s D E Shaw.
As Tenneco Inc (NYSE:TEN) has witnessed bearish sentiment from the top-tier hedge fund industry, logic holds that there exists a select few fund managers that decided to sell off their full holdings at the end of the second quarter. Intriguingly, David Cohen and Harold Levy’s Iridian Asset Management said goodbye to the largest position of all the hedgies we key on, worth an estimated $60.2 million in stock, and Wayne Cooperman of Cobalt Capital Management was right behind this move, as the fund sold off about $6.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds at the end of the second quarter.
What have insiders been doing with Tenneco Inc (NYSE:TEN)?
Bullish insider trading is most useful when the company in question has seen transactions within the past half-year. Over the last half-year time frame, Tenneco Inc (NYSE:TEN) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll go over the relationship between both of these indicators in other stocks similar to Tenneco Inc (NYSE:TEN). These stocks are Dorman Products Inc. (NASDAQ:DORM), Westport Innovations Inc. (USA) (NASDAQ:WPRT), Visteon Corp (NYSE:VC), Gentex Corporation (NASDAQ:GNTX), and Dana Holding Corporation (NYSE:DAN). This group of stocks are the members of the auto parts industry and their market caps are closest to TEN’s market cap.