Were Hedge Funds Right About Texas Pacific Land Trust (TPL)?
With the first-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 second quarter of 2021. One of these stocks was Texas Pacific Land Trust (NYSE:TPL).
Is Texas Pacific Land Trust (NYSE:TPL) going to take off soon? Prominent investors were turning bullish. The number of bullish hedge fund positions advanced by 6 in recent months. Texas Pacific Land Trust (NYSE:TPL) was in 17 hedge funds' portfolios at the end of March. The all time high for this statistic is 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TPL isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
According to most market participants, hedge funds are seen as worthless, old investment vehicles of yesteryear. While there are over 8000 funds in operation at the moment, Our researchers hone in on the top tier of this club, approximately 850 funds. It is estimated that this group of investors direct most of the smart money's total asset base, and by watching their unrivaled stock picks, Insider Monkey has discovered various investment strategies that have historically exceeded Mr. Market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Noam Gottesman of GLG Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Now we're going to take a look at the fresh hedge fund action encompassing Texas Pacific Land Trust (NYSE:TPL).
Do Hedge Funds Think TPL Is A Good Stock To Buy Now?
At first quarter's end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 55% from the fourth quarter of 2020. By comparison, 14 hedge funds held shares or bullish call options in TPL a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Horizon Asset Management was the largest shareholder of Texas Pacific Land Trust (NYSE:TPL), with a stake worth $2476.2 million reported as of the end of March. Trailing Horizon Asset Management was Beddow Capital Management, which amassed a stake valued at $17.6 million. Mountain Lake Investment Management, Arrowstreet Capital, and Citadel Investment Group 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 Horizon Asset Management allocated the biggest weight to Texas Pacific Land Trust (NYSE:TPL), around 56.13% of its 13F portfolio. Beddow Capital Management is also relatively very bullish on the stock, setting aside 11.19 percent of its 13F equity portfolio to TPL.
As industrywide interest jumped, key money managers were leading the bulls' herd. Horizon Asset Management, managed by Murray Stahl, initiated the largest position in Texas Pacific Land Trust (NYSE:TPL). Horizon Asset Management had $2.4762 billion invested in the company at the end of the quarter. Mitch Cantor's Mountain Lake Investment Management also initiated a $15.9 million position during the quarter. The following funds were also among the new TPL investors: Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Ken Griffin's Citadel Investment Group, and Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners.
Let's now take a look at hedge fund activity in other stocks similar to Texas Pacific Land Trust (NYSE:TPL). We will take a look at Sunrun Inc (NASDAQ:RUN), Canopy Growth Corporation (NYSE:CGC), Opendoor Technologies Inc. (NASDAQ:OPEN), Quanta Services Inc (NYSE:PWR), RH (NYSE:RH), Cna Financial Corporation (NYSE:CNA), and Signature Bank (NASDAQ:SBNY). This group of stocks' market valuations resemble TPL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RUN,41,2405187,-7 CGC,12,157087,-7 OPEN,33,1046505,5 PWR,33,897017,0 RH,50,2992390,8 CNA,19,74356,3 SBNY,40,925856,12 Average,32.6,1214057,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.6 hedge funds with bullish positions and the average amount invested in these stocks was $1214 million. That figure was $2557 million in TPL's case. RH (NYSE:RH) is the most popular stock in this table. On the other hand Canopy Growth Corporation (NYSE:CGC) is the least popular one with only 12 bullish hedge fund positions. Texas Pacific Land Trust (NYSE:TPL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TPL is 46.6. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately TPL wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TPL investors were disappointed as the stock returned -5.5% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Get real-time email alerts: Follow Texas Pacific Land Trust (NYSE:TPL)
Suggested Articles:
Disclosure: None. This article was originally published at Insider Monkey.
