Is TPI Composites, Inc. (TPIC) A Good Stock To Buy?
Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards TPI Composites, Inc. (NASDAQ:TPIC) changed recently.
Is TPIC a good stock to buy now? Prominent investors were taking a bearish view. The number of bullish hedge fund positions were cut by 9 recently. TPI Composites, Inc. (NASDAQ:TPIC) was in 18 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 27. Our calculations also showed that TPIC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 27 hedge funds in our database with TPIC holdings at the end of December.
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Richard Driehaus of Driehaus Capital
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Do Hedge Funds Think TPIC Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in TPIC a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Caxton Associates LP held the most valuable stake in TPI Composites, Inc. (NASDAQ:TPIC), which was worth $45.2 million at the end of the fourth quarter. On the second spot was Adage Capital Management which amassed $21.2 million worth of shares. Renaissance Technologies, Driehaus Capital, and Millennium Management 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 Quaero Capital allocated the biggest weight to TPI Composites, Inc. (NASDAQ:TPIC), around 4.94% of its 13F portfolio. Caxton Associates LP is also relatively very bullish on the stock, dishing out 4.1 percent of its 13F equity portfolio to TPIC.
Judging by the fact that TPI Composites, Inc. (NASDAQ:TPIC) has witnessed a decline in interest from hedge fund managers, we can see that there were a few money managers who sold off their entire stakes in the first quarter. At the top of the heap, Bruce Emery's Greenvale Capital sold off the biggest stake of all the hedgies monitored by Insider Monkey, comprising about $62.8 million in stock, and Alexander Mitchell's Scopus Asset Management was right behind this move, as the fund said goodbye to about $19.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 9 funds in the first quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as TPI Composites, Inc. (NASDAQ:TPIC) but similarly valued. We will take a look at Sonic Automotive Inc (NYSE:SAH), Sandy Spring Bancorp Inc. (NASDAQ:SASR), Eventbrite, Inc. (NYSE:EB), Health Catalyst, Inc (NASDAQ:HCAT), Constellium SE (NYSE:CSTM), Bottomline Technologies (NASDAQ:EPAY), and USANA Health Sciences, Inc. (NYSE:USNA). This group of stocks' market caps are closest to TPIC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SAH,17,102454,-1 SASR,12,38897,4 EB,24,351562,-2 HCAT,20,134687,-1 CSTM,36,377226,1 EPAY,19,98039,1 USNA,19,250382,-3 Average,21,193321,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $193 million. That figure was $124 million in TPIC's case. Constellium SE (NYSE:CSTM) is the most popular stock in this table. On the other hand Sandy Spring Bancorp Inc. (NASDAQ:SASR) is the least popular one with only 12 bullish hedge fund positions. TPI Composites, Inc. (NASDAQ:TPIC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TPIC is 28.5. 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 TPIC wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TPIC investors were disappointed as the stock returned -33.2% 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.
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Disclosure: None. This article was originally published at Insider Monkey.
