The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards TC Pipelines, LP (NYSE:TCP).
TC Pipelines, LP (NYSE:TCP) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of September, same as at the end of June. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as NuStar Energy L.P. (NYSE:NS), Colfax Corp (NYSE:CFX), and Ternium S.A. (ADR) (NYSE:TX) to gather more data points.
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How have hedgies been trading TC Pipelines, LP (NYSE:TCP)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter of 2016. The graph below displays the number of hedge funds with bullish positions in TCP over the last 5 quarters, which peaked at 8 at the end of March. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, holds the biggest position in TC Pipelines, LP (NYSE:TCP). Renaissance Technologies has a $10.4 million position in the stock. Sitting at the No. 2 spot is William Michaelcheck of Mariner Investment Group which holds a $4.1 million position; 2.1% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish contain Stephen J. Errico’s Locust Wood Capital Advisers, Israel Englander’s Millennium Management, and George Hall’s Clinton Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually got rid of their positions entirely. It’s worth mentioning that Richard Driehaus’ Driehaus Capital got rid of the biggest position of the 700 funds studied by Insider Monkey, valued at about $4.6 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund sold off about $0.8 million worth of shares.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as TC Pipelines, LP (NYSE:TCP) but similarly valued. We will take a look at NuStar Energy L.P. (NYSE:NS), Colfax Corp (NYSE:CFX), Ternium S.A. (ADR) (NYSE:TX), and Cepheid (NASDAQ:CPHD). All of these stocks’ market caps resemble TCP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NS | 8 | 13485 | 1 |
| CFX | 28 | 931325 | 10 |
| TX | 14 | 89430 | 0 |
| CPHD | 33 | 512141 | 16 |
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $387 million. That figure was $18 million in TCP’s case. Cepheid (NASDAQ:CPHD) is the most popular stock in this table. On the other hand NuStar Energy L.P. (NYSE:NS) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks TC Pipelines, LP (NYSE:TCP) is even less popular than NS. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock.
Disclosure: None
