Did Hedge Funds Make The Right Call On Talend S.A. (TLND) ?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Talend S.A. (NASDAQ:TLND) and determine whether the smart money was really smart about this stock.

Is Talend S.A. (NASDAQ:TLND) a bargain? Investors who are in the know were getting more optimistic. The number of long hedge fund positions advanced by 5 recently. Our calculations also showed that TLND isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

David Brown Hawk Ridge Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. Now let’s check out the recent hedge fund action encompassing Talend S.A. (NASDAQ:TLND).

How have hedgies been trading Talend S.A. (NASDAQ:TLND)?

At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TLND over the last 18 quarters. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Is TLND A Good Stock To Buy?

More specifically, Praesidium Investment Management Company was the largest shareholder of Talend S.A. (NASDAQ:TLND), with a stake worth $39.5 million reported as of the end of September. Trailing Praesidium Investment Management Company was Sunriver Management, which amassed a stake valued at $34.2 million. 40 North Management, Hawk Ridge Management, and Light Street Capital 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 Sunriver Management allocated the biggest weight to Talend S.A. (NASDAQ:TLND), around 5.99% of its 13F portfolio. North Run Capital is also relatively very bullish on the stock, designating 5.44 percent of its 13F equity portfolio to TLND.

With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. 40 North Management, managed by David S. Winter and David J. Millstone, assembled the biggest position in Talend S.A. (NASDAQ:TLND). 40 North Management had $30.3 million invested in the company at the end of the quarter. David Brown’s Hawk Ridge Management also initiated a $28.4 million position during the quarter. The other funds with brand new TLND positions are David Rosen’s Rubric Capital Management, Spencer M. Waxman’s Shannon River Fund Management, and Len Kipp and Xavier Majic’s Maple Rock Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Talend S.A. (NASDAQ:TLND) but similarly valued. We will take a look at Third Point Reinsurance Ltd (NYSE:TPRE), Novavax, Inc. (NASDAQ:NVAX), INTL Fcstone Inc (NASDAQ:INTL), and BRP Inc. (NASDAQ:DOOO). All of these stocks’ market caps are closest to TLND’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TPRE 17 40013 -3
NVAX 4 11335 1
INTL 10 83773 1
DOOO 10 52931 1
Average 10.25 47013 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $333 million in TLND’s case. Third Point Reinsurance Ltd (NYSE:TPRE) is the most popular stock in this table. On the other hand Novavax, Inc. (NASDAQ:NVAX) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Talend S.A. (NASDAQ:TLND) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on TLND as the stock returned 54.5% in Q2 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.