The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Tronox Holdings Plc (NYSE:TROX) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Tronox Holdings Plc (NYSE:TROX) was in 21 hedge funds’ portfolios at the end of June. The all time high for this statistics is 33. TROX shareholders have witnessed an increase in hedge fund sentiment recently. There were 17 hedge funds in our database with TROX holdings at the end of March. Our calculations also showed that TROX isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. We are also checking out this lithium company which could benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Keeping this in mind let’s review the new hedge fund action regarding Tronox Holdings Plc (NYSE:TROX).
What does smart money think about Tronox Holdings Plc (NYSE:TROX)?
Heading into the third quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in TROX over the last 20 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Among these funds, Maple Rock Capital held the most valuable stake in Tronox Holdings Plc (NYSE:TROX), which was worth $24 million at the end of the third quarter. On the second spot was Private Capital Management which amassed $18.9 million worth of shares. Luminus Management, Millennium Management, and Marshall Wace LLP were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Maple Rock Capital allocated the biggest weight to Tronox Holdings Plc (NYSE:TROX), around 4.81% of its 13F portfolio. Private Capital Management is also relatively very bullish on the stock, earmarking 4.68 percent of its 13F equity portfolio to TROX.
Now, some big names have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the most outsized position in Tronox Holdings Plc (NYSE:TROX). Marshall Wace LLP had $3.8 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also initiated a $3.4 million position during the quarter. The following funds were also among the new TROX investors: Renaissance Technologies, Robert Henry Lynch’s Aristeia Capital, and Greg Eisner’s Engineers Gate Manager.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Tronox Holdings Plc (NYSE:TROX) but similarly valued. We will take a look at Universal Corp (NYSE:UVV), Amphastar Pharmaceuticals Inc (NASDAQ:AMPH), Daqo New Energy Corp (NYSE:DQ), Revolve Group, Inc. (NYSE:RVLV), The Liberty Braves Group (NASDAQ:BATRA), GenMark Diagnostics, Inc (NASDAQ:GNMK), and Teekay LNG Partners L.P. (NYSE:TGP). This group of stocks’ market values resemble TROX’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $85 million in TROX’s case. GenMark Diagnostics, Inc (NASDAQ:GNMK) is the most popular stock in this table. On the other hand Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) is the least popular one with only 9 bullish hedge fund positions. Tronox Holdings Plc (NYSE:TROX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TROX is 68.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 gained 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. Hedge funds were also right about betting on TROX, though not to the same extent, as the stock returned 9.8% in Q3 and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.