Did Hedge Funds Drop The Ball On Tenaris S.A. (TS) ?

At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31. In this article, we will use that wealth of knowledge to determine whether or not Tenaris S.A. (NYSE:TS) makes for a good investment right now.

Is Tenaris S.A. (NYSE:TS) ready to rally soon? Prominent investors are taking a bearish view. The number of long hedge fund positions retreated by 5 recently. Our calculations also showed that TS isn’t among the 30 most popular stocks among hedge funds. TS was in 13 hedge funds’ portfolios at the end of December. There were 18 hedge funds in our database with TS holdings at the end of the previous quarter.

If you’d ask most market participants, hedge funds are seen as slow, old investment tools of the past. While there are greater than 8000 funds with their doors open today, Our experts look at the elite of this club, about 750 funds. These investment experts orchestrate bulk of all hedge funds’ total asset base, and by watching their inimitable equity investments, Insider Monkey has unsheathed a number of investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship hedge fund strategy outstripped the S&P 500 index by nearly 5 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

John Armitage Egerton Capital

Let’s go over the latest hedge fund action encompassing Tenaris S.A. (NYSE:TS).

Hedge fund activity in Tenaris S.A. (NYSE:TS)

At the end of the fourth quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -28% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in TS over the last 14 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).


According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Egerton Capital Limited, managed by John Armitage, holds the biggest position in Tenaris S.A. (NYSE:TS). Egerton Capital Limited has a $160.5 million position in the stock, comprising 1.3% of its 13F portfolio. The second most bullish fund manager is Millennium Management, managed by Israel Englander, which holds a $66.4 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions include Jim Simons’s Renaissance Technologies, D. E. Shaw’s D E Shaw and John W. Rogers’s Ariel Investments.

Since Tenaris S.A. (NYSE:TS) has experienced declining sentiment from hedge fund managers, it’s easy to see that there were a few hedgies who sold off their full holdings heading into Q3. Interestingly, Andreas Halvorsen’s Viking Global said goodbye to the biggest stake of the 700 funds tracked by Insider Monkey, totaling about $73.5 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also said goodbye to its stock, about $19.2 million worth. These moves are important to note, as total hedge fund interest was cut by 5 funds heading into Q3.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Tenaris S.A. (NYSE:TS) but similarly valued. We will take a look at The Cooper Companies, Inc. (NYSE:COO), Principal Financial Group Inc (NASDAQ:PFG), CNH Industrial NV (NYSE:CNHI), and STMicroelectronics N.V. (NYSE:STM). This group of stocks’ market values are similar to TS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
COO 21 1104178 3
PFG 18 98221 3
CNHI 16 295732 2
STM 11 168370 0
Average 16.5 416625 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $417 million. That figure was $371 million in TS’s case. The Cooper Companies, Inc. (NYSE:COO) is the most popular stock in this table. On the other hand STMicroelectronics N.V. (NYSE:STM) is the least popular one with only 11 bullish hedge fund positions. Tenaris S.A. (NYSE:TS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. A handful of hedge funds were also right about betting on TS as the stock returned 30.2% and outperformed the market as well.

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