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Tesoro Corporation (TSO): Are Hedge Funds Right About This Stock?

Is Tesoro Corporation (NYSE:TSO) a buy right now? Hedge funds are turning bullish. The number of long hedge fund positions improved by 8 lately.

Tesoro Corporation

In the eyes of most market participants, hedge funds are viewed as unimportant, old investment vehicles of yesteryear. While there are more than 8000 funds with their doors open at present, we at Insider Monkey choose to focus on the aristocrats of this club, close to 450 funds. It is estimated that this group controls the lion’s share of the hedge fund industry’s total asset base, and by tracking their highest performing stock picks, we have spotted a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as integral, optimistic insider trading sentiment is another way to break down the world of equities. As the old adage goes: there are many motivations for a corporate insider to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the valuable potential of this tactic if shareholders understand where to look (learn more here).

With these “truths” under our belt, we’re going to take a gander at the key action regarding Tesoro Corporation (NYSE:TSO).

How have hedgies been trading Tesoro Corporation (NYSE:TSO)?

Heading into Q2, a total of 42 of the hedge funds we track held long positions in this stock, a change of 24% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully.

According to our comprehensive database, Odey Asset Management Group, managed by Crispin Odey, holds the biggest position in Tesoro Corporation (NYSE:TSO). Odey Asset Management Group has a $131.6 million position in the stock, comprising 4.6% of its 13F portfolio. The second largest stake is held by Rob Citrone of Discovery Capital Management, with a $95.9 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Robert Pitts’s Steadfast Capital Management, D. E. Shaw’s D E Shaw and Steven Cohen’s SAC Capital Advisors.

Now, key hedge funds were leading the bulls’ herd. Steadfast Capital Management, managed by Robert Pitts, created the most valuable position in Tesoro Corporation (NYSE:TSO). Steadfast Capital Management had 75.1 million invested in the company at the end of the quarter. Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital also made a $33.7 million investment in the stock during the quarter. The following funds were also among the new TSO investors: Steven Cohen’s SAC Capital Advisors, Tom Wagner and Ara Cohen’s Knighthead Capital, and George Soros’s Soros Fund Management.

What have insiders been doing with Tesoro Corporation (NYSE:TSO)?

Insider buying is at its handiest when the company in focus has experienced transactions within the past half-year. Over the latest 180-day time period, Tesoro Corporation (NYSE:TSO) has experienced 1 unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Tesoro Corporation (NYSE:TSO). These stocks are CVR Energy, Inc. (NYSE:CVI), Ultrapar Participacoes SA (ADR) (NYSE:UGP), Murphy Oil Corporation (NYSE:MUR), HollyFrontier Corp (NYSE:HFC), and Access Midstream Partners LP (NYSE:ACMP). This group of stocks are in the oil & gas refining & marketing industry and their market caps resemble TSO’s market cap.