Is TROX Stock A Buy or Sell?

Abigail Fisher
·6 min read

The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Tronox Holdings Plc (NYSE:TROX).

Is TROX a buy? The best stock pickers were in a bullish mood. The number of bullish hedge fund bets increased by 6 lately. Tronox Holdings Plc (NYSE:TROX) was in 25 hedge funds' portfolios at the end of December. The all time high for this statistic is 33. Our calculations also showed that TROX isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Jonathan Barrett Luminus Management
Jonathan Barrett Luminus Management

Jonathan Barrett of Luminus Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 let's review the fresh hedge fund action encompassing Tronox Holdings Plc (NYSE:TROX).

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

At fourth quarter's end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 32% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in TROX a year ago. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Among these funds, Maple Rock Capital held the most valuable stake in Tronox Holdings Plc (NYSE:TROX), which was worth $51.6 million at the end of the fourth quarter. On the second spot was Private Capital Management which amassed $22.1 million worth of shares. Millennium Management, Impala Asset Management, and Luminus 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 Maple Rock Capital allocated the biggest weight to Tronox Holdings Plc (NYSE:TROX), around 7.49% of its 13F portfolio. Private Capital Management is also relatively very bullish on the stock, dishing out 4.1 percent of its 13F equity portfolio to TROX.

With a general bullishness amongst the heavyweights, key money managers were leading the bulls' herd. Impala Asset Management, managed by Robert Bishop, assembled the biggest position in Tronox Holdings Plc (NYSE:TROX). Impala Asset Management had $13.5 million invested in the company at the end of the quarter. Richard Driehaus's Driehaus Capital also made a $8 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Louis Bacon's Moore Global Investments, and Chuck Royce's Royce & Associates.

Let's check out hedge fund activity in other stocks similar to Tronox Holdings Plc (NYSE:TROX). These stocks are Niu Technologies (NASDAQ:NIU), Compass Minerals International, Inc. (NYSE:CMP), AeroVironment, Inc. (NASDAQ:AVAV), Healthcare Services Group, Inc. (NASDAQ:HCSG), NGM Biopharmaceuticals, Inc. (NASDAQ:NGM), TransAlta Corporation (NYSE:TAC), and NANO-X IMAGING LTD (NASDAQ:NNOX). All of these stocks' market caps are closest to TROX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NIU,11,144909,-3 CMP,10,51749,-4 AVAV,16,77439,0 HCSG,18,161505,-5 NGM,13,231629,1 TAC,16,66939,3 NNOX,3,11938,-3 Average,12.4,106587,-1.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $107 million. That figure was $177 million in TROX's case. Healthcare Services Group, Inc. (NASDAQ:HCSG) is the most popular stock in this table. On the other hand NANO-X IMAGING LTD (NASDAQ:NNOX) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Tronox Holdings Plc (NYSE:TROX) is more popular among hedge funds. Our overall hedge fund sentiment score for TROX is 82.7. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 12.3% in 2021 through April 19th but still managed to beat the market by 0.9 percentage points. Hedge funds were also right about betting on TROX as the stock returned 37.1% since the end of December (through 4/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.

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