Many investors, including Carl Icahn or Stan Druckenmiller, have been saying for a while now that the current market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the third quarter, many investors lost money due to unpredictable events such as the concerns over Valeant’s drug pricing policy that led to an overall drop among pharma stocks. Nevertheless, many of the stocks that tanked in the third quarter still sport strong fundamentals and their decline was more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Timkensteel Corp (NYSE:TMST) changed recently.
Timkensteel Corp (NYSE:TMST) has experienced an increase in hedge fund sentiment in recent months. TMST was in 16 hedge funds’ portfolios at the end of the third quarter of 2015. There were 13 hedge funds in our database with TMST positions at the end of the previous quarter. At the end of this article we will also compare TMST to other stocks, including WL Ross Holding Corp (NASDAQ:WLRHU), Star Bulk Carriers Corp. (NASDAQ:SBLK), and Ennis, Inc. (NYSE:EBF) to get a better sense of its popularity.
In the financial world, there are a large number of tools market participants put to use to analyze their holdings. A duo of the most underrated tools are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the top hedge fund managers can beat the market by a solid margin (see the details here).
Now, let’s take a glance at the new action encompassing Timkensteel Corp (NYSE:TMST).
What have hedge funds been doing with Timkensteel Corp (NYSE:TMST)?
Heading into Q4, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 23% from the second quarter. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, D E Shaw has the biggest position in Timkensteel Corp (NYSE:TMST), worth close to $9.1 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Litespeed Management, led by Jamie Zimmerman, holding a $8.7 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Other peers with similar optimism consist of Ed Beddow and William Tichy’s Beddow Capital Management, Chuck Royce’s Royce & Associates, and Robert Jaffe’s Force Capital.