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Do Hedge Funds Love Terex Corporation (TEX)?

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Terex Corporation (NYSE:TEX) based on that data.

Terex Corporation (NYSE:TEX) investors should pay attention to a decrease in hedge fund interest recently. Our calculations also showed that TEX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Richard Pzena - Pzena Investment Management

Richard S. Pzena of Pzena Investment Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to check out the recent hedge fund action surrounding Terex Corporation (NYSE:TEX).

How are hedge funds trading Terex Corporation (NYSE:TEX)?

At Q1’s end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from one quarter earlier. On the other hand, there were a total of 21 hedge funds with a bullish position in TEX a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Terex Corporation (NYSE:TEX) was held by Pzena Investment Management, which reported holding $66.5 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $28.3 million position. Other investors bullish on the company included AQR Capital Management, D E Shaw, and Marshall Wace LLP. In terms of the portfolio weights assigned to each position Pzena Investment Management allocated the biggest weight to Terex Corporation (NYSE:TEX), around 0.5% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, earmarking 0.08 percent of its 13F equity portfolio to TEX.

Due to the fact that Terex Corporation (NYSE:TEX) has witnessed a decline in interest from hedge fund managers, we can see that there lies a certain “tier” of hedgies that slashed their positions entirely last quarter. At the top of the heap, Larry Foley and Paul Farrell’s Bronson Point Partners said goodbye to the biggest position of the “upper crust” of funds followed by Insider Monkey, totaling close to $4.2 million in stock. Noam Gottesman’s fund, GLG Partners, also dumped its stock, about $4.2 million worth. These moves are important to note, as total hedge fund interest was cut by 1 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Terex Corporation (NYSE:TEX). These stocks are Intra-Cellular Therapies Inc (NASDAQ:ITCI), Hope Bancorp, Inc. (NASDAQ:HOPE), SFL Corporation Ltd. (NYSE:SFL), and Comstock Resources Inc (NYSE:CRK). This group of stocks’ market caps are closest to TEX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ITCI 19 99236 7
HOPE 18 42707 -1
SFL 14 43537 0
CRK 3 2762 -4
Average 13.5 47061 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $147 million in TEX’s case. Intra-Cellular Therapies Inc (NASDAQ:ITCI) is the most popular stock in this table. On the other hand Comstock Resources Inc (NYSE:CRK) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Terex Corporation (NYSE:TEX) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 12.2% in 2020 through June 17th but still managed to beat the market by 14.8 percentage points. Hedge funds were also right about betting on TEX as the stock returned 34.3% so far in Q2 (through June 17th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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