Where Do Hedge Funds Stand On Tootsie Roll Industries, Inc. (TR)?

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Tootsie Roll Industries, Inc. (NYSE:TR).

Tootsie Roll Industries, Inc. (NYSE:TR) was in 15 hedge funds’ portfolios at the end of September. The all time high for this statistic is 19. TR shareholders have witnessed a decrease in hedge fund sentiment in recent months. There were 19 hedge funds in our database with TR positions at the end of the second quarter. Our calculations also showed that TR 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.

If you’d ask most traders, hedge funds are viewed as slow, outdated financial vehicles of yesteryear. While there are more than 8000 funds in operation today, We look at the masters of this group, about 850 funds. It is estimated that this group of investors watch over bulk of the smart money’s total capital, and by watching their best picks, Insider Monkey has unearthed numerous investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

David Harding

David Harding of Winton Capital Management

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 we’re going to take a peek at the new hedge fund action surrounding Tootsie Roll Industries, Inc. (NYSE:TR).

Do Hedge Funds Think TR Is A Good Stock To Buy Now?

At third quarter’s end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in TR over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Mario Gabelli’s GAMCO Investors has the biggest position in Tootsie Roll Industries, Inc. (NYSE:TR), worth close to $24.8 million, corresponding to 0.3% of its total 13F portfolio. On GAMCO Investors’s heels is Renaissance Technologies, holding a $22.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions encompass Chuck Royce’s Royce & Associates, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and David Harding’s Winton Capital Management. In terms of the portfolio weights assigned to each position Wallace Capital Management allocated the biggest weight to Tootsie Roll Industries, Inc. (NYSE:TR), around 0.41% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, dishing out 0.3 percent of its 13F equity portfolio to TR.

Due to the fact that Tootsie Roll Industries, Inc. (NYSE:TR) has faced falling interest from the entirety of the hedge funds we track, logic holds that there was a specific group of hedgies that slashed their full holdings in the third quarter. At the top of the heap, Brandon Haley’s Holocene Advisors dropped the largest stake of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $0.5 million in stock. Cliff Asness’s fund, AQR Capital Management, also sold off its stock, about $0.4 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 4 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Tootsie Roll Industries, Inc. (NYSE:TR). We will take a look at Karuna Therapeutics, Inc. (NASDAQ:KRTX), First Interstate Bancsystem Inc (NASDAQ:FIBK), Taubman Centers, Inc. (NYSE:TCO), Mr. Cooper Group Inc. (NASDAQ:COOP), EPR Properties (NYSE:EPR), SpringWorks Therapeutics, Inc. (NASDAQ:SWTX), and SciPlay Corporation (NASDAQ:SCPL). All of these stocks’ market caps resemble TR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KRTX 15 168000 -1
FIBK 11 14085 -1
TCO 36 538236 -4
COOP 23 416248 -1
EPR 24 327724 1
SWTX 16 847645 1
SCPL 27 128931 1
Average 21.7 348696 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $349 million. That figure was $83 million in TR’s case. Taubman Centers, Inc. (NYSE:TCO) is the most popular stock in this table. On the other hand First Interstate Bancsystem Inc (NASDAQ:FIBK) is the least popular one with only 11 bullish hedge fund positions. Tootsie Roll Industries, Inc. (NYSE:TR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TR is 32.7. 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 December 14th and surpassed the market again by 15.8 percentage points. Unfortunately TR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TR investors were disappointed as the stock returned -0.3% since the end of September (through 12/14) 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.