In this article we will take a look at whether hedge funds think Thermon Group Holdings, Inc. (NYSE:THR) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Thermon Group Holdings, Inc. (NYSE:THR) a bargain? Investors who are in the know were cutting their exposure. The number of long hedge fund positions retreated by 2 lately. Thermon Group Holdings, Inc. (NYSE:THR) was in 10 hedge funds’ portfolios at the end of June. The all time high for this statistic is 14. Our calculations also showed that THR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 12 hedge funds in our database with THR positions at the end of the first quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David E. Shaw of D.E. Shaw
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. Now we’re going to take a gander at the new hedge fund action surrounding Thermon Group Holdings, Inc. (NYSE:THR).
Do Hedge Funds Think THR Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the first quarter of 2020. By comparison, 12 hedge funds held shares or bullish call options in THR a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Todd J. Kantor’s Encompass Capital Advisors has the largest position in Thermon Group Holdings, Inc. (NYSE:THR), worth close to $5.7 million, comprising 0.4% of its total 13F portfolio. Sitting at the No. 2 spot is D E Shaw, led by D. E. Shaw, holding a $3.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers with similar optimism contain Jeffrey Moskowitz’s Harvey Partners, Peter Schliemann’s Rutabaga Capital Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Harvey Partners allocated the biggest weight to Thermon Group Holdings, Inc. (NYSE:THR), around 2.21% of its 13F portfolio. Rutabaga Capital Management is also relatively very bullish on the stock, setting aside 1.24 percent of its 13F equity portfolio to THR.
Since Thermon Group Holdings, Inc. (NYSE:THR) has witnessed declining sentiment from hedge fund managers, we can see that there was a specific group of hedge funds that decided to sell off their entire stakes last quarter. Intriguingly, Israel Englander’s Millennium Management dumped the biggest investment of the “upper crust” of funds watched by Insider Monkey, comprising about $1.3 million in stock. Bryant Regan’s fund, Lafitte Capital Management, also dumped its stock, about $1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Thermon Group Holdings, Inc. (NYSE:THR) but similarly valued. We will take a look at SOC Telemed, Inc. (NASDAQ:TLMD), Noodles & Co (NASDAQ:NDLS), Ituran Location and Control Ltd. (NASDAQ:ITRN), Digimarc Corp (NASDAQ:DMRC), Bioceres Crop Solutions Corp. (NYSE:BIOX), Intersect ENT Inc (NASDAQ:XENT), and Franklin Street Properties Corp. (NYSE:FSP). This group of stocks’ market values are similar to THR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TLMD | 11 | 46611 | -1 |
| NDLS | 18 | 180584 | 0 |
| ITRN | 12 | 81659 | -1 |
| DMRC | 11 | 59295 | -3 |
| BIOX | 1 | 1784 | -3 |
| XENT | 17 | 72520 | 3 |
| FSP | 11 | 16837 | -1 |
| Average | 11.6 | 65613 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $66 million. That figure was $22 million in THR’s case. Noodles & Co (NASDAQ:NDLS) is the most popular stock in this table. On the other hand Bioceres Crop Solutions Corp. (NYSE:BIOX) is the least popular one with only 1 bullish hedge fund positions. Thermon Group Holdings, Inc. (NYSE:THR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for THR is 50.9. 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 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 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. A small number of hedge funds were also right about betting on THR as the stock returned 5.2% since the end of the second quarter (through 9/27) and outperformed the market by an even larger margin.
Follow Thermon Group Holdings Inc. (NYSE:THR)
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Disclosure: None. This article was originally published at Insider Monkey.
