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Is Taubman Centers, Inc. (TCO) Going To Burn These Hedge Funds ?

After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Taubman Centers, Inc. (NYSE:TCO).

Taubman Centers, Inc. (NYSE:TCO) investors should pay attention to a decrease in support from the world’s most elite money managers in recent months. Our calculations also showed that TCO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

At the moment there are several signals shareholders use to grade their holdings. A couple of the most innovative signals are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can trounce the market by a significant margin (see the details here).

James Dondero Highland Capital Management

James Dondero of Highland Capital Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the key hedge fund action surrounding Taubman Centers, Inc. (NYSE:TCO).

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

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in TCO a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Land & Buildings Investment Management was the largest shareholder of Taubman Centers, Inc. (NYSE:TCO), with a stake worth $56.5 million reported as of the end of September. Trailing Land & Buildings Investment Management was Millennium Management, which amassed a stake valued at $29 million. Citadel Investment Group, GLG Partners, and Marshall Wace 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 Land & Buildings Investment Management allocated the biggest weight to Taubman Centers, Inc. (NYSE:TCO), around 12.47% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, designating 0.84 percent of its 13F equity portfolio to TCO.

Because Taubman Centers, Inc. (NYSE:TCO) has faced a decline in interest from hedge fund managers, we can see that there lies a certain “tier” of hedge funds that slashed their full holdings by the end of the third quarter. Interestingly, Jeffrey Furber’s AEW Capital Management cut the biggest stake of the “upper crust” of funds watched by Insider Monkey, worth close to $27.3 million in call options. Dmitry Balyasny’s fund, Balyasny Asset Management, also cut its call options, about $2.2 million worth. These transactions are interesting, as total hedge fund interest was cut by 4 funds by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Taubman Centers, Inc. (NYSE:TCO). These stocks are John Wiley & Sons Inc (NYSE:JW), Summit Materials Inc (NYSE:SUM), Stantec Inc. (NYSE:STN), and First Financial Bancorp (NASDAQ:FFBC). This group of stocks’ market values are similar to TCO’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
JW 18 103460 1
SUM 24 648854 2
STN 6 82873 0
FFBC 7 14549 -1
Average 13.75 212434 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $212 million. That figure was $137 million in TCO’s case. Summit Materials Inc (NYSE:SUM) is the most popular stock in this table. On the other hand Stantec Inc. (NYSE:STN) is the least popular one with only 6 bullish hedge fund positions. Taubman Centers, Inc. (NYSE:TCO) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 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 -20.5% during the fourth quarter (through the end of November) 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 so far this year.

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

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