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Hedge Funds Are Buying The Timken Company (TKR)

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At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

The Timken Company (NYSE:TKR) was in 27 hedge funds’ portfolios at the end of the third quarter of 2016. TKR shareholders have witnessed an increase in support from the world’s most successful money managers lately. There were 26 hedge funds in our database with TKR holdings at the end of the previous quarter. At the end of this article we will also compare TKR to other stocks including Texas Roadhouse Inc (NASDAQ:TXRH), Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL), and Autohome Inc (ADR) (NYSE:ATHM) to get a better sense of its popularity.

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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. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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What does the smart money think about The Timken Company (NYSE:TKR)?

At Q3’s end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a gain of 4% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in TKR at the beginning of this year. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

TKR Chart

According to Insider Monkey’s hedge fund database, AQR Capital Management, led by Cliff Asness, holds the largest position in The Timken Company (NYSE:TKR). AQR Capital Management has a $50.6 million position in the stock. Sitting at the No. 2 spot is Citadel Investment Group, led by Ken Griffin, which holds a $15.8 million position. Some other professional money managers that hold long positions comprise D. E. Shaw’s D E Shaw, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. We should note that none of these hedge funds are 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.

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