Is TGH A Good Stock To Buy Now?

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. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. What do these smart investors think about Textainer Group Holdings Limited (NYSE:TGH)?

Is TGH a good stock to buy now? Textainer Group Holdings Limited (NYSE:TGH) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds’ portfolios at the end of September. Our calculations also showed that TGH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare TGH to other stocks including Seritage Growth Properties (NYSE:SRG), Phoenix Tree Holdings Limited (NYSE:DNK), and Nantkwest Inc (NASDAQ:NK) to get a better sense of its popularity.

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

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let’s view the fresh hedge fund action regarding Textainer Group Holdings Limited (NYSE:TGH).

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

At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in TGH 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.

The largest stake in Textainer Group Holdings Limited (NYSE:TGH) was held by Rutabaga Capital Management, which reported holding $5.4 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $4.5 million position. Other investors bullish on the company included Renaissance Technologies, Millennium Management, and Marshall Wace LLP. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to Textainer Group Holdings Limited (NYSE:TGH), around 3.06% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to TGH.

Since Textainer Group Holdings Limited (NYSE:TGH) has faced bearish sentiment from hedge fund managers, it’s safe to say that there was a specific group of hedgies who were dropping their positions entirely heading into Q4. At the top of the heap, Greg Eisner’s Engineers Gate Manager said goodbye to the biggest investment of the 750 funds watched by Insider Monkey, totaling an estimated $0.3 million in stock. Donald Sussman’s fund, Paloma Partners, also dropped its stock, about $0.2 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks similar to Textainer Group Holdings Limited (NYSE:TGH). These stocks are Seritage Growth Properties (NYSE:SRG), Phoenix Tree Holdings Limited (NYSE:DNK), Nantkwest Inc (NASDAQ:NK), Central Securities Corporation (NYSE:CET), Vapotherm, Inc. (NYSE:VAPO), Criteo SA (NASDAQ:CRTO), and PAR Technology Corporation (NYSE:PAR). All of these stocks’ market caps match TGH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SRG 12 126062 -6
DNK 3 151959 0
NK 10 6919 2
CET 3 16311 0
VAPO 18 161202 0
CRTO 11 59115 0
PAR 12 281827 2
Average 9.9 114771 -0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.9 hedge funds with bullish positions and the average amount invested in these stocks was $115 million. That figure was $18 million in TGH’s case. Vapotherm, Inc. (NYSE:VAPO) is the most popular stock in this table. On the other hand Phoenix Tree Holdings Limited (NYSE:DNK) is the least popular one with only 3 bullish hedge fund positions. Textainer Group Holdings Limited (NYSE:TGH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TGH is 45.8. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on TGH as the stock returned 35.6% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.

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