TIM Participacoes SA (ADR) (TSU): Are Hedge Funds Right About This Stock?

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Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The time period between June 25 and the end of October was one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of TIM Participacoes SA (ADR) (NYSE:TSU).

TIM Participacoes SA (ADR) (NYSE:TSU) was in 13 hedge funds’ portfolios at the end of the third quarter of 2015. TSU shareholders have witnessed a decrease in support from the world’s most elite money managers recently. There were 25 hedge funds in our database with TSU holdings at the end of the previous quarter. 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 Manhattan Associates, Inc. (NASDAQ:MANH), Empire State Realty Trust Inc (NYSE:ESRT), and Grupo Aeroportuario del Sureste (ADR) (NYSE:ASR) to gather more data points.

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In the eyes of most market participants, hedge funds are seen as worthless, old financial tools of the past. While there are more than an 8000 funds trading at present, We hone in on the upper echelon of this club, about 700 funds. It is estimated that this group of investors manage most of the hedge fund industry’s total asset base, and by following their best equity investments, Insider Monkey has determined several investment strategies that have historically outrun the broader indices. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points a year for a decade in their back tests.

With all of this in mind, we’re going to take a gander at the new action encompassing TIM Participacoes SA (ADR) (NYSE:TSU).

How are hedge funds trading TIM Participacoes SA (ADR) (NYSE:TSU)?

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -48% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Paul Singer’s Elliott Management has the number one position in TIM Participacoes SA (ADR) (NYSE:TSU), worth close to $122.3 million, corresponding to 2.3% of its total 13F portfolio. The second largest stake is held by Paulson & Co, managed by John Paulson, which holds a $56.7 million position; 0.3% of its 13F portfolio is allocated to the stock. Other peers that hold long positions contain Ken Griffin’s Citadel Investment Group, Ricky Sandler’s Eminence Capital and Israel Englander’s Millennium Management.

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