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Is Titan Machinery Inc. (TITN) Going to Burn These Hedge Funds?

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In the eyes of many market players, hedge funds are seen as overrated, old financial vehicles of an era lost to time. Although there are more than 8,000 hedge funds with their doors open today, Insider Monkey focuses on the elite of this group, about 525 funds. It is assumed that this group controls the lion’s share of the hedge fund industry’s total assets, and by paying attention to their highest performing picks, we’ve found a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Equally as useful, bullish insider trading activity is a second way to look at the financial markets. There are lots of stimuli for an insider to sell shares of his or her company, but just one, very clear reason why they would behave bullishly. Several academic studies have demonstrated the valuable potential of this strategy if investors know what to do (learn more here).

Now that that’s out of the way, it’s important to analyze the recent info about Titan Machinery Inc. (NASDAQ:TITN).

What have hedge funds been doing with Titan Machinery Inc. (NASDAQ:TITN)?

In preparation for the third quarter, a total of 13 of the hedge funds we track were long in this stock, a change of 8% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully.

Titan Machinery Inc. (NASDAQ:TITN)According to our 13F database, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Titan Machinery Inc. (NASDAQ:TITN). Renaissance Technologies has a $5.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Basswood Capital, managed by Matthew Lindenbaum, which held a $4.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Joseph A. Jolson’s Harvest Capital Strategies, Brian Taylor’s Pine River Capital Management and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners.

As industrywide interest increased, certain bigger names have jumped into Titan Machinery Inc. (NASDAQ:TITN) headfirst. Oaktree Capital Management, managed by Howard Marks, initiated the most valuable position in Titan Machinery Inc. (NASDAQ:TITN). Oaktree Capital Management had 10.2 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $5.2 million investment in the stock during the quarter. The other funds with brand new TITN positions are Matthew Lindenbaum’s Basswood Capital, Joseph A. Jolson’s Harvest Capital Strategies, and Brian Taylor’s Pine River Capital Management.

What have insiders been doing with Titan Machinery Inc. (NASDAQ:TITN)?

Insider buying is best served when the primary stock in question has seen transactions within the past six months. Over the latest 180-day time frame, Titan Machinery Inc. (NASDAQ:TITN) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators in other stocks similar to Titan Machinery Inc. (NASDAQ:TITN). These stocks are Barnes & Noble, Inc. (NYSE:BKS), Zumiez Inc. (NASDAQ:ZUMZ), Brown Shoe Company, Inc. (NYSE:BWS), American Greetings Corporation (NYSE:AM), and United Online, Inc. (NASDAQ:UNTD). This group of stocks are the members of the specialty retail, other industry and their market caps resemble TITN’s market cap.

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