Do Hedge Funds Love Teekay Corporation (TK)?

Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 8.7% through October 26th. Forty percent of the S&P 500 constituents were down more than 10%. The average return of a randomly picked stock in the index is -9.5%. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 25 most popular S&P 500 stocks among hedge funds had an average loss of 8.8%. In this article, we will take a look at what hedge funds think about Teekay Corporation (NYSE:TK).

Is Teekay Corporation (NYSE:TK) worth your attention right now? Hedge funds are betting on the stock. The number of long hedge fund positions went up by 3 lately. Our calculations also showed that tk isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

We’re going to take a peek at the key hedge fund action regarding Teekay Corporation (NYSE:TK).

How are hedge funds trading Teekay Corporation (NYSE:TK)?

At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. On the other hand, there were a total of 6 hedge funds with a bullish position in TK at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with TK Positions

Among these funds, Dalton Investments held the most valuable stake in Teekay Corporation (NYSE:TK), which was worth $10.4 million at the end of the third quarter. On the second spot was Orbis Investment Management which amassed $10.3 million worth of shares. Moreover, Renaissance Technologies, Luminus Management, and Two Sigma Advisors were also bullish on Teekay Corporation (NYSE:TK), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, some big names were leading the bulls’ herd. Luminus Management, managed by Jonathan Barrett and Paul Segal, assembled the largest position in Teekay Corporation (NYSE:TK). Luminus Management had $4.4 million invested in the company at the end of the quarter. David Rosen’s Rubric Capital Management also made a $0.5 million investment in the stock during the quarter. The other funds with brand new TK positions are Paul Marshall and Ian Wace’s Marshall Wace LLP, David Costen Haley’s HBK Investments, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s go over hedge fund activity in other stocks similar to Teekay Corporation (NYSE:TK). These stocks are Camden National Corporation (NASDAQ:CAC), DHT Holdings Inc (NYSE:DHT), Team, Inc. (NYSE:TISI), and Fidelity Southern Corporation (NASDAQ:LION). This group of stocks’ market caps resemble TK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CAC 6 60948 0
DHT 12 61049 2
TISI 12 116715 0
LION 9 32687 0
Average 9.75 67850 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $34 million in TK’s case. DHT Holdings Inc (NYSE:DHT) is the most popular stock in this table. On the other hand Camden National Corporation (NASDAQ:CAC) is the least popular one with only 6 bullish hedge fund positions. Teekay Corporation (NYSE:TK) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard DHT might be a better candidate to consider a long position.

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