The largest gainer on our list is Tsakos Energy Navigation Ltd. (NYSE:TNP), as its shares have surged by more than 33% on a year-to-date basis and about 35% over the past year. The $802.23 million provider of transportation services for oil and petroleum products has benefited from the increased activity in its industry segment owing to the prevalent low oil prices that have resulted in a rise in demand. An idea of the boom in the business can be drawn from the rates for transporting Saudi Arabian crude to Japan, which is the industry’s benchmark and is at its highest level since 2009. While almost 44% of the company’s shares are held by institutions, there was little enthusiasm shown by the hedge funds that we track in Tsakos Energy Navigation Ltd. (NYSE:TNP)’s future prospects. At the end of the first quarter 16 funds had positions in the company valued at $103.35 million as opposed to 15 firms with $85.21 million at the end of last year. Shares rose by 20% during this period. Brian Taylor’s Pine River Capital Management is the largest stockholder of Tsakos Energy Navigation Ltd. (NYSE:TNP) among the company’s investors that we track, holding about 4.69 million shares valued at $38.34 million.
It’s possible the smart money was betting on a resolution in Greece, which has not happened, or the improvement of the shipping industry, which has not entirely happened yet either, so there is clear strength in some segments. Given that most of the Greek shipping companies are well off their 1-year highs and there is some bullish hedge fund sentiment swirling around them, we feel it may a decent time to make a contrarian bet and take stakes in some of these seemingly downtrodden shippers.
An everyday investor does not have the time or the required skill-set to carry out an in-depth analysis of equities and identify companies with the best future prospects like a fund with the knowledge and resources of Visium can. However, it is also not a good idea to pay the egregiously high fees that investment firms charge for their stock picking expertise. Thus a retail investor is better off to monkey the most popular stock picks among hedge funds by him or herself. But not just any picks mind you. Our research has shown that a portfolio based on hedge funds’ top stock picks (which are invariably comprised entirely of large-cap companies) falls considerably short of a portfolio based on their best small-cap stock picks. The most popular large-cap stocks among hedge funds underperformed the market by an average of seven basis points per month in our back tests whereas the 15 most popular small-cap stock picks among hedge funds outperformed the market by nearly a percentage point per month over the same period between 1999 and 2012. Since officially launching our small-cap strategy in August 2012 it has performed just as predicted, beating the market by over 84 percentage points and returning over 144%, while hedge funds themselves have collectively underperformed the market (read the details here).
Disclosure: None
