Hedge Funds Have Never Been This Bullish On Taubman Centers, Inc. (TCO)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 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 March 31st, a week after the market trough. In this article we look at what those investors think of Taubman Centers, Inc. (NYSE:TCO).

Is Taubman Centers, Inc. (NYSE:TCO) a buy here? The smart money is becoming hopeful. The number of long hedge fund bets moved up by 12 recently. Our calculations also showed that TCO 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). TCO was in 38 hedge funds’ portfolios at the end of the first quarter of 2020. There were 26 hedge funds in our database with TCO holdings at the end of the previous quarter.

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

To most traders, hedge funds are perceived as underperforming, old financial tools of yesteryear. While there are more than 8000 funds with their doors open at present, We look at the upper echelon of this group, approximately 850 funds. These investment experts preside over the lion’s share of all hedge funds’ total capital, and by paying attention to their unrivaled equity investments, Insider Monkey has brought to light many investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .


James Dinan of York Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities 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. Keeping this in mind we’re going to take a glance at the fresh hedge fund action encompassing Taubman Centers, Inc. (NYSE:TCO).

Hedge fund activity in Taubman Centers, Inc. (NYSE:TCO)

At Q1’s end, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 46% from the previous quarter. On the other hand, there were a total of 14 hedge funds with a bullish position in TCO a year ago. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

The largest stake in Taubman Centers, Inc. (NYSE:TCO) was held by Pentwater Capital Management, which reported holding $83.8 million worth of stock at the end of September. It was followed by Alpine Associates with a $57 million position. Other investors bullish on the company included Water Island Capital, Carlson Capital, and York Capital Management. In terms of the portfolio weights assigned to each position Litespeed Management allocated the biggest weight to Taubman Centers, Inc. (NYSE:TCO), around 5.14% of its 13F portfolio. Sandell Asset Management is also relatively very bullish on the stock, earmarking 3.88 percent of its 13F equity portfolio to TCO.

Consequently, key money managers have been driving this bullishness. Pentwater Capital Management, managed by Matthew Halbower, established the most outsized position in Taubman Centers, Inc. (NYSE:TCO). Pentwater Capital Management had $83.8 million invested in the company at the end of the quarter. Robert Emil Zoellner’s Alpine Associates also initiated a $57 million position during the quarter. The other funds with new positions in the stock are John Orrico’s Water Island Capital, Clint Carlson’s Carlson Capital, and James Dinan’s York Capital Management.

Let’s check out hedge fund activity in other stocks similar to Taubman Centers, Inc. (NYSE:TCO). These stocks are Gildan Activewear Inc (NYSE:GIL), Brighthouse Financial, Inc. (NASDAQ:BHF), Qurate Retail, Inc. (NASDAQ:QRTEA), and Lexington Realty Trust (NYSE:LXP). This group of stocks’ market caps are similar to TCO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GIL 22 274827 0
BHF 25 372976 -18
QRTEA 32 477820 -7
LXP 10 41143 -4
Average 22.25 291692 -7.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $292 million. That figure was $479 million in TCO’s case. Qurate Retail, Inc. (NASDAQ:QRTEA) is the most popular stock in this table. On the other hand Lexington Realty Trust (NYSE:LXP) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Taubman Centers, Inc. (NYSE:TCO) 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 gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately TCO wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on TCO were disappointed as the stock returned -1.3% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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