The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards Liberty Tax Inc (NASDAQ:TAX), and what that likely means for the prospects of the company and its stock.
Hedge fund interest in Liberty Tax Inc (NASDAQ:TAX) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Insteel Industries Inc (NASDAQ:IIIN), Jones Energy Inc (NYSE:JONE), and Aratana Therapeutics Inc (NASDAQ:PETX) to gather more data points.
At the moment there are a multitude of methods investors employ to analyze their holdings. A pair of the most useful methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best money managers can trounce their index-focused peers by a very impressive amount (see the details here).
Keeping this in mind, we’re going to analyze the key action surrounding Liberty Tax Inc (NASDAQ:TAX).
What have hedge funds been doing with Liberty Tax Inc (NASDAQ:TAX)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Nine Ten Partners, managed by Brian Bares, Russell Mollen, and James Bradshaw, holds the most valuable position in Liberty Tax Inc (NASDAQ:TAX). Nine Ten Partners has a $25.8 million position in the stock, comprising 11.6% of its 13F portfolio. Coming in second is Chuck Royce’s Royce & Associates, with a $18.6 million position; 0.1% of its 13F portfolio is allocated to the company. Some other peers with similar optimism comprise Bryant Regan’s Lafitte Capital Management and Andy Redleaf’s Whitebox Advisors.