Is Tronox Holdings Plc (TROX) A Good Stock To Buy?

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. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Tronox Holdings Plc (NYSE:TROX).

Tronox Holdings Plc (NYSE:TROX) shareholders have witnessed a decrease in hedge fund sentiment in recent months. Our calculations also showed that TROX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

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

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Jonathan Barrett Luminus Management

Jonathan Barrett of Luminus Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a gander at the latest hedge fund action encompassing Tronox Holdings Plc (NYSE:TROX).

Hedge fund activity in Tronox Holdings Plc (NYSE:TROX)

At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -26% from one quarter earlier. On the other hand, there were a total of 24 hedge funds with a bullish position in TROX a year ago. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Len Kipp and Xavier Majic’s Maple Rock Capital has the largest position in Tronox Holdings Plc (NYSE:TROX), worth close to $17.2 million, comprising 4.4% of its total 13F portfolio. Coming in second is Gregg J. Powers of Private Capital Management, with a $13.6 million position; the fund has 4.3% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Jonathan Barrett and Paul Segal’s Luminus Management, Andrew Byington’s Appian Way Asset Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Maple Rock Capital allocated the biggest weight to Tronox Holdings Plc (NYSE:TROX), around 4.41% of its 13F portfolio. Private Capital Management is also relatively very bullish on the stock, designating 4.26 percent of its 13F equity portfolio to TROX.

Because Tronox Holdings Plc (NYSE:TROX) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of fund managers that slashed their positions entirely last quarter. Intriguingly, Robert Pohly’s Samlyn Capital cut the biggest stake of the 750 funds watched by Insider Monkey, valued at about $16.3 million in stock, and Louis Bacon’s Moore Global Investments was right behind this move, as the fund sold off about $4.6 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 6 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Tronox Holdings Plc (NYSE:TROX) but similarly valued. We will take a look at AudioCodes Ltd. (NASDAQ:AUDC), EverQuote, Inc. (NASDAQ:EVER), Veritex Holdings Inc (NASDAQ:VBTX), and INMODE LTD. (NASDAQ:INMD). This group of stocks’ market valuations are closest to TROX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AUDC 10 37318 1
EVER 23 110730 4
VBTX 9 34975 -1
INMD 11 59841 4
Average 13.25 60716 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $52 million in TROX’s case. EverQuote, Inc. (NASDAQ:EVER) is the most popular stock in this table. On the other hand Veritex Holdings Inc (NASDAQ:VBTX) is the least popular one with only 9 bullish hedge fund positions. Tronox Holdings Plc (NYSE:TROX) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on TROX as the stock returned 55% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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