A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Tata Motors Limited (NYSE:TTM).
Is TTM a good stock to buy now? Tata Motors Limited (NYSE:TTM) was in 10 hedge funds’ portfolios at the end of September. The all time high for this statistics is 22. TTM has experienced an increase in support from the world’s most elite money managers of late. There were 9 hedge funds in our database with TTM holdings at the end of June. Our calculations also showed that TTM 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).
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.
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 review the key hedge fund action surrounding Tata Motors Limited (NYSE:TTM).
Do Hedge Funds Think TTM Is A Good Stock To Buy Now?
At third quarter’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in TTM a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Tata Motors Limited (NYSE:TTM), with a stake worth $20.5 million reported as of the end of September. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $6.5 million. Millennium Management, AQR Capital Management, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Weld Capital Management allocated the biggest weight to Tata Motors Limited (NYSE:TTM), around 0.04% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to TTM.
As industrywide interest jumped, some big names have jumped into Tata Motors Limited (NYSE:TTM) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most outsized position in Tata Motors Limited (NYSE:TTM). Marshall Wace LLP had $0.6 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.2 million investment in the stock during the quarter. The only other fund with a brand new TTM position is Donald Sussman’s Paloma Partners.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Tata Motors Limited (NYSE:TTM) but similarly valued. These stocks are Arch Coal Inc (NYSE:ACI), Lear Corporation (NYSE:LEA), JOYY Inc. (NASDAQ:YY), Reliance Steel & Aluminum Co. (NYSE:RS), Interpublic Group of Companies Inc (NYSE:IPG), PRA Health Sciences Inc (NASDAQ:PRAH), and Reinsurance Group of America Inc (NYSE:RGA). This group of stocks’ market values resemble TTM’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $693 million. That figure was $34 million in TTM’s case. Lear Corporation (NYSE:LEA) is the most popular stock in this table. On the other hand PRA Health Sciences Inc (NASDAQ:PRAH) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Tata Motors Limited (NYSE:TTM) is even less popular than PRAH. Our overall hedge fund sentiment score for TTM is 19.6. 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. Hedge funds clearly dropped the ball on TTM as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 TTM as the stock returned 37% since Q3 (through December 8th) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.