Hedge Funds Are Selling Tempur Sealy International Inc (TPX)

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Tempur Sealy International Inc (NYSE:TPX).

Tempur Sealy International Inc (NYSE:TPX) shareholders have witnessed a decrease in hedge fund sentiment of late, as 5 fewer hedge funds own the stock. At the end of this article we will also compare TPX to other stocks including World Fuel Services Corporation (NYSE:INT), Kirby Corporation (NYSE:KEX), and Seaboard Corporation (NYSEAMEX:SEB) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

With all of this in mind, let’s take a look at the key action regarding Tempur Sealy International Inc (NYSE:TPX).

How are hedge funds trading Tempur Sealy International Inc (NYSE:TPX)?

Heading into the fourth quarter of 2016, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a 14% drop from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, H Partners Management, managed by Rehan Jaffer, holds the most valuable position in Tempur Sealy International Inc (NYSE:TPX). H Partners Management has a $397.2 million position in the stock, comprising 32.2% of its 13F portfolio. Coming in second is Chieftain Capital, led by John Shapiro, holding a $190.2 million position; 11% of its 13F portfolio is allocated to the company. Some other professional money managers with similar optimism include Rob Citrone’s Discovery Capital Management, Philip Uhde’s Echinus Advisors, and Ryan Pedlow’s Two Creeks Capital Management.

Judging by the fact that Tempur Sealy International Inc (NYSE:TPX) has witnessed a decline in interest from the smart money, we can see that there was a specific group of fund managers that elected to cut their full holdings last quarter. Interestingly, Marc Majzner’s Clearline Capital cut the biggest position of all the hedgies watched by Insider Monkey, valued at about $31.4 million in stock, and Clint Carlson’s Carlson Capital was right behind this move, as the fund cut about $18 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 5 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Tempur Sealy International Inc (NYSE:TPX). We will take a look at World Fuel Services Corporation (NYSE:INT), Kirby Corporation (NYSE:KEX), Seaboard Corporation (NYSEAMEX:SEB), and AU Optronics Corp. (ADR) (NYSE:AUO). This group of stocks’ market values resemble TPX’s market value.

As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $1.20 billion in TPX’s case. World Fuel Services Corporation (NYSE:INT) is the most popular stock in this table. On the other hand Seaboard Corporation (NYSEAMEX:SEB) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Tempur Sealy International Inc (NYSE:TPX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None