Is Terex Corporation (TEX) Going to Burn These Hedge Funds?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Terex Corporation (NYSE:TEX).

Terex Corporation (NYSE:TEX) investors should be aware of an increase in enthusiasm from smart money in recent months. Terex Corporation (NYSE:TEX) was in 31 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 38. There were 23 hedge funds in our database with TEX positions at the end of the fourth quarter. Our calculations also showed that TEX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

To the average investor there are a large number of formulas market participants have at their disposal to analyze publicly traded companies. A duo of the less known formulas are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can outperform their index-focused peers by a healthy margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Richard Driehaus of Driehaus Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a gander at the latest hedge fund action regarding Terex Corporation (NYSE:TEX).

Do Hedge Funds Think TEX Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 35% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TEX over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Terex Corporation (NYSE:TEX) was held by Pzena Investment Management, which reported holding $165.1 million worth of stock at the end of December. It was followed by Fisher Asset Management with a $112.3 million position. Other investors bullish on the company included Citadel Investment Group, Driehaus Capital, and AQR Capital Management. In terms of the portfolio weights assigned to each position Greenhouse Funds allocated the biggest weight to Terex Corporation (NYSE:TEX), around 1.3% of its 13F portfolio. Jade Capital Advisors is also relatively very bullish on the stock, designating 1.1 percent of its 13F equity portfolio to TEX.

As aggregate interest increased, specific money managers have jumped into Terex Corporation (NYSE:TEX) headfirst. Moore Global Investments, managed by Louis Bacon, established the biggest call position in Terex Corporation (NYSE:TEX). Moore Global Investments had $16.9 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also initiated a $4.5 million position during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Robert Vincent McHugh’s Jade Capital Advisors, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management.

Let’s check out hedge fund activity in other stocks similar to Terex Corporation (NYSE:TEX). We will take a look at Brookfield Business Partners L.P. (NYSE:BBU), Danimer Scientific, Inc. (NYSE:DNMR), Werner Enterprises, Inc. (NASDAQ:WERN), Simmons First National Corporation (NASDAQ:SFNC), Hilton Grand Vacations Inc. (NYSE:HGV), Old National Bancorp (NASDAQ:ONB), and Root, Inc. (NASDAQ:ROOT). This group of stocks’ market values match TEX’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BBU 3 6237 0
DNMR 30 533383 12
WERN 21 213603 -3
SFNC 12 22164 6
HGV 34 783198 3
ONB 17 50718 6
ROOT 18 346606 -7
Average 19.3 279416 2.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.3 hedge funds with bullish positions and the average amount invested in these stocks was $279 million. That figure was $502 million in TEX’s case. Hilton Grand Vacations Inc. (NYSE:HGV) is the most popular stock in this table. On the other hand Brookfield Business Partners L.P. (NYSE:BBU) is the least popular one with only 3 bullish hedge fund positions. Terex Corporation (NYSE:TEX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TEX is 79.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately TEX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TEX were disappointed as the stock returned 2.3% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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