At Insider Monkey, we pore over the filings of more than 700 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Town Sports International Holdings, Inc. (NASDAQ:CLUB) makes for a good investment right now.
Town Sports International Holdings, Inc. (NASDAQ:CLUB) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of the third quarter of 2015. At the end of this article, we will also compare Town Sports International Holdings, Inc. (NASDAQ:CLUB) to other stocks, including Ion Geophysical Corp (NYSE:IO), Global Power Equipment Group Inc (NASDAQ:GLPW), and S&W Seed Company (NASDAQ:SANW) to get a better sense of its popularity.
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At the moment, there are a multitude of indicators market participants can use to appraise their stock investments. Two of the most underrated indicators are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the top investment managers can trounce the market by a significant amount (see the details here).
With all of this in mind, let’s go over the key action surrounding Town Sports International Holdings, Inc. (NASDAQ:CLUB).
What does the smart money think about Town Sports International Holdings, Inc. (NASDAQ:CLUB)?
Heading into Q4, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, flat over the second quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Farallon Capital has the largest position in Town Sports International Holdings, Inc. (NASDAQ:CLUB), worth close to $10.7 million, accounting for 0.1% of its total 13F portfolio. Coming in second is Parag Vora of HG Vora Capital Management, with a $10.2 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions comprise Renaissance Technologies, John Overdeck and David Siegel’s Two Sigma Advisors, and D E Shaw.
We view hedge fund selling in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Nine Chapters Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case here because only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Wallace Capital Management).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Town Sports International Holdings, Inc. (NASDAQ:CLUB) but similarly valued. We will take a look at Ion Geophysical Corp (NYSE:IO), Global Power Equipment Group Inc (NYSE:GLPW), S&W Seed Company (NASDAQ:SANW), and Ocera Therapeutics Inc (NASDAQ:OCRX). This group of stocks’ market caps is closest to Town Sports International Holdings, Inc. (NASDAQ:CLUB)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IO | 11 | 2217 | 0 |
| GLPW | 14 | 21542 | -1 |
| SANW | 5 | 8106 | -1 |
| OCRX | 9 | 15385 | -1 |
As you can see, these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $24 million in Town Sports International Holdings, Inc. (NASDAQ:CLUB)’s case. Global Power Equipment Group Inc (NASDAQ:GLPW) is the most popular stock in this table. On the other hand, S&W Seed Company (NASDAQ:SANW) is the least popular one with only 5 bullish hedge fund positions. Town Sports International Holdings, Inc. (NASDAQ:CLUB) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Global Power Equipment Group Inc (NASDAQ:GLPW) might be a better candidate to consider a long position.
