Hedge Funds Are Betting On Taubman Centers, Inc. (TCO)

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 28. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Taubman Centers, Inc. (NYSE:TCO).

Taubman Centers, Inc. (NYSE:TCO) has experienced an increase in hedge fund sentiment recently. Our calculations also showed that TCO isn’t among the 30 most popular stocks among hedge funds (view video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? 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 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to check out the recent hedge fund action encompassing Taubman Centers, Inc. (NYSE:TCO).

What does smart money think about Taubman Centers, Inc. (NYSE:TCO)?

At the end of the second quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 79% from one quarter earlier. By comparison, 21 hedge funds held shares or bullish call options in TCO a year ago. 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 TCO Positions

Among these funds, Land & Buildings Investment Management held the most valuable stake in Taubman Centers, Inc. (NYSE:TCO), which was worth $45.5 million at the end of the second quarter. On the second spot was AEW Capital Management which amassed $27.3 million worth of shares. Moreover, Balyasny Asset Management, Millennium Management, and GLG Partners were also bullish on Taubman Centers, Inc. (NYSE:TCO), allocating a large percentage of their portfolios to this stock.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Tudor Investment Corp, managed by Paul Tudor Jones, established the most outsized position in Taubman Centers, Inc. (NYSE:TCO). Tudor Investment Corp had $2.7 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $2.2 million position during the quarter. The following funds were also among the new TCO investors: Matthew Tewksbury’s Stevens Capital Management, D. E. Shaw’s D E Shaw, and Bruce Kovner’s Caxton Associates LP.

Let’s now take a look at hedge fund activity in other stocks similar to Taubman Centers, Inc. (NYSE:TCO). These stocks are Columbia Property Trust Inc (NYSE:CXP), Hillenbrand, Inc. (NYSE:HI), YETI Holdings, Inc. (NYSE:YETI), and Guangshen Railway Company Limited (NYSE:GSH). This group of stocks’ market valuations are closest to TCO’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CXP 12 59497 -3
HI 18 57614 -2
YETI 12 65998 -2
GSH 1 3864 0
Average 10.75 46743 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $150 million in TCO’s case. Hillenbrand, Inc. (NYSE:HI) is the most popular stock in this table. On the other hand Guangshen Railway Company Limited (NYSE:GSH) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Taubman Centers, Inc. (NYSE:TCO) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately TCO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TCO were disappointed as the stock returned 1.6% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.

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