Hedgies

tpltblogger7 Comments

I’m fairly sure a robot wrote this but it might be worth adding to your mosaic nonetheless.

At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in TPL at the beginning of this year. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

TPL_dec2018

The largest stake in Texas Pacific Land Trust (NYSE:TPL) was held by Horizon Asset Management, which reported holding $1578 million worth of stock at the end of September. It was followed by Polar Capital with a $24.7 million position. Other investors bullish on the company included Arrowstreet Capital, White Elm Capital, and Renaissance Technologies.

Consequently, key hedge funds have been driving this bullishness. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, created the most outsized position in Texas Pacific Land Trust (NYSE:TPL). Polar Capital had $24.7 million invested in the company at the end of the quarter.

7 thoughts on “Hedgies”

  1. Thanks for finding this article as I am not familiar with Insider Monkey. But I’m confused. The conclusion of the article seems contradictory to the bullish headline:

    “Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.”

    I would appreciate your interpretation of the article and the implications for we individual investors. Hedge funds are very complex, but my basic understanding is that they are investment vehicles only made available to very high end investors, and a main difference between hedge funds and regular mutual funds is that hedge funds typically have a very different fee structure (“2 and 20”) where there is 2% management fee and 20% incentive fee on their gains. I got crucified on the Yahoo board for putting forth speculation that hedge funds might be behind the high selling volume that has occurred over the last two months in order lock in gains and fund those 20% incentive fees, but this article seems to suggest that hedge funds would tend to take more of long position on TPL. Just hearing that Horizon Kinetics is considered a hedge fund is interesting to know. Look forward to your thoughts as always.

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  2. Hi Jeff, I don’t think its the most highly valued information in the world. I understand HK portfolios to be mostly long only so I agree that it is surprising that they are on the list. To be perfectly honest, this could be clickbait. That said, I thought the chart was interesting and could be helpful to the degree that folks think it is accurate. #grainofsalt

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  3. I’m surprised more hedge funds are not buying. However oil seems to be the short play on the list. More producers are net long so I am encouraged by that.

    I also saw this Bloomberg article about the Delaware Basin having more oil. I had to look at the Texas Pacific Land Trust map portion to confirm they indeed had property in the Delaware Basin.

    Meet the New Permian, It’s Double the Size of the Old One
    By Kevin Crowley
    December 6, 2018, 12:27 PM PST

    “The Permian’s Delaware Basin, the less drilled part of the giant West Texas and New Mexico oil field, holds more than twice the amount of crude as its sister, the Midland Basin, the U.S. Geological Service said Thursday.

    The Wolfcamp Shale and Bone Spring rock formations in the Delaware hold an estimated 46.3 billion barrels, the scientists said in their first assessment of the area. In addition, it holds about 281 trillion cubic feet of natural gas, about 18 times the amount in the Midland Basin, which is more heavily drilled and better known.”

    wow.

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  4. Its interesting Renaissance Technologies is on the list of hedge fund investors. They are very successful, and don’t take any outsiders investments. A quant heavy shop, and they look for any pattern to base their trading on. Very bright math types and a ton of servers are in use to crunch their algorithms. Anyway, its hard to know what factor made them buy TPL, but as of the 9/30 insiders reports for Renaissance, they had reduced their TPL holdings by 34%. Will be interesting to see if they have bought more or closed out the position by end of year.

    May do some research and see when they started owning, so far only see them back to Q2.

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  5. Ted, appreciate any research you may be looking into and sharing with us on Renaissance Technologies. If they had been reducing their TPL stake prior to the Oct/Nov correction, it would be interesting to know if they were continuing their selloff, making them one of the culprits who contributed mightily to the downward pressure on share price.

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  6. Jeff,

    As of 9/30 Renaissance Technologies held 9,412 shares after selling 4,900 in q3. I don’t find any ownership before q2 reporting, so it suggests to me a quantitative model based on price momentum, and as that retreated, they started to fade the position. I will see what I can learn after the q4 report, however I expect they will have exited the position. They are not known for long term holdings.

    I do find it interesting institutional ownership is 39.68% of the shares. That is higher than usual, its been HK for years, and just about nobody else, which is the theme of tplblogger on this topic.

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    • The Bloomberg Terminal tells me the total owned by institutional holders (sum of all 13d and 13f filings) = 64.5%. It is slowly creeping up from the low 63% range in mid 2017. The data before that doesn’t look accurate. This number is higher than the 42% calculated on the BB HDS page but it seems more right to me.

      “Percentage of Shares Outstanding held by institutions. Institutions include 13Fs, US and International Mutual Funds, Schedule Ds (US Insurance Companies) and Institutional stake holdings that appear on the aggregate level. Based on holdings data collected by Bloomberg”.

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