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Did Hedge Funds Drop The Ball On TTM Technologies, Inc. (TTMI) ?

Reputable billionaire investors such as Cliff Asness and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

TTM Technologies, Inc. (NASDAQ:TTMI) investors should be aware of a decrease in hedge fund interest in recent months. Our calculations also showed that TTMI isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

GOTHAM ASSET MANAGEMENT

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s analyze the fresh hedge fund action regarding TTM Technologies, Inc. (NASDAQ:TTMI).

What does smart money think about TTM Technologies, Inc. (NASDAQ:TTMI)?

At Q2’s end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TTMI over the last 16 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

TTMI_oct2019

More specifically, Royce & Associates was the largest shareholder of TTM Technologies, Inc. (NASDAQ:TTMI), with a stake worth $9.5 million reported as of the end of March. Trailing Royce & Associates was Divisar Capital, which amassed a stake valued at $4.7 million. D E Shaw, Gotham Asset Management, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.

Judging by the fact that TTM Technologies, Inc. (NASDAQ:TTMI) has faced falling interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of fund managers who sold off their full holdings by the end of the second quarter. Intriguingly, Steve Cohen’s Point72 Asset Management dropped the largest investment of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $18.2 million in stock, and Cliff Asness’s AQR Capital Management was right behind this move, as the fund cut about $1.1 million worth. These moves are important to note, as aggregate hedge fund interest fell by 4 funds by the end of the second quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as TTM Technologies, Inc. (NASDAQ:TTMI) but similarly valued. These stocks are Playa Hotels & Resorts N.V. (NASDAQ:PLYA), Nabors Industries Ltd. (NYSE:NBR), Quotient Technology Inc (NYSE:QUOT), and GTT Communications Inc (NYSE:GTT). This group of stocks’ market valuations match TTMI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PLYA 18 405569 -1
NBR 22 104959 -8
QUOT 13 226231 -3
GTT 18 345241 0
Average 17.75 270500 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $271 million. That figure was $19 million in TTMI’s case. Nabors Industries Ltd. (NYSE:NBR) is the most popular stock in this table. On the other hand Quotient Technology Inc (NYSE:QUOT) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks TTM Technologies, Inc. (NASDAQ:TTMI) is even less popular than QUOT. Hedge funds clearly dropped the ball on TTMI as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on TTMI as the stock returned 19.6% during the third quarter and outperformed the market by an even larger margin.

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

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