Is Turkcell (NYSE:TKC) a good stock to buy now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Hedge fund interest in Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that TKC 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as MorphoSys AG (NASDAQ:MOR), Essent Group Ltd (NYSE:ESNT), and Meritage Homes Corp (NYSE:MTH) to gather more data points.
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 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Bruce Kovner of Caxton Associates LP
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. Keeping this in mind we’re going to analyze the new hedge fund action encompassing Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC).
What does smart money think about Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC)?
Heading into the fourth quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TKC over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Oldfield Partners, managed by Richard Oldfield, holds the most valuable position in Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC). Oldfield Partners has a $24.3 million position in the stock, comprising 2.6% of its 13F portfolio. The second largest stake is held by Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $10.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism contain John Overdeck and David Siegel’s Two Sigma Advisors, Bruce Kovner’s Caxton Associates LP and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Oldfield Partners allocated the biggest weight to Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC), around 2.62% of its 13F portfolio. Caxton Associates LP is also relatively very bullish on the stock, earmarking 0.04 percent of its 13F equity portfolio to TKC.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Renaissance Technologies. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Caxton Associates LP).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) but similarly valued. We will take a look at MorphoSys AG (NASDAQ:MOR), Essent Group Ltd (NYSE:ESNT), Meritage Homes Corp (NYSE:MTH), Neogen Corporation (NASDAQ:NEOG), CMC Materials, Inc. (NASDAQ:CCMP), Envestnet Inc (NYSE:ENV), and Futu Holdings Limited (NASDAQ:FUTU). This group of stocks’ market caps are closest to TKC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MOR | 4 | 13716 | -2 |
| ESNT | 22 | 241956 | -7 |
| MTH | 25 | 339658 | -3 |
| NEOG | 18 | 43051 | 0 |
| CCMP | 15 | 120272 | -8 |
| ENV | 25 | 165485 | 6 |
| FUTU | 15 | 102562 | 7 |
| Average | 17.7 | 146671 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $147 million. That figure was $35 million in TKC’s case. Meritage Homes Corp (NYSE:MTH) is the most popular stock in this table. On the other hand MorphoSys AG (NASDAQ:MOR) is the least popular one with only 4 bullish hedge fund positions. Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TKC is 24. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 30.7% in 2020 through November 27th and surpassed the market again by 16.1 percentage points. Unfortunately TKC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TKC investors were disappointed as the stock returned 6.1% since the end of September (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
