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Do Hedge Funds Love Tactile Systems Technology, Inc. (TCMD)?

It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 24.4% during the first 9 months of 2019 and outperformed the S&P 500 ETF by 4 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards Tactile Systems Technology, Inc. (NASDAQ:TCMD) changed during the first quarter.

Is Tactile Systems Technology, Inc. (NASDAQ:TCMD) ready to rally soon? Hedge funds are in a pessimistic mood. The number of long hedge fund bets fell by 2 recently. Our calculations also showed that TCMD isn’t among the 30 most popular stocks among hedge funds (see the video below). TCMD was in 15 hedge funds’ portfolios at the end of June. There were 17 hedge funds in our database with TCMD positions at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To most traders, hedge funds are viewed as unimportant, outdated financial tools of yesteryear. While there are greater than 8000 funds in operation at the moment, We look at the bigwigs of this club, around 750 funds. It is estimated that this group of investors manage the lion’s share of the hedge fund industry’s total asset base, and by shadowing their highest performing stock picks, Insider Monkey has formulated many investment strategies that have historically surpassed the broader indices. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

TCMD_oct2019

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 take a look at the latest hedge fund action encompassing Tactile Systems Technology, Inc. (NASDAQ:TCMD).

Hedge fund activity in Tactile Systems Technology, Inc. (NASDAQ:TCMD)

At Q2’s end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from the previous quarter. By comparison, 9 hedge funds held shares or bullish call options in TCMD a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Richard Driehaus

Among these funds, Marshall Wace LLP held the most valuable stake in Tactile Systems Technology, Inc. (NASDAQ:TCMD), which was worth $17.9 million at the end of the second quarter. On the second spot was Driehaus Capital which amassed $11.4 million worth of shares. Moreover, D E Shaw, Citadel Investment Group, and Two Sigma Advisors were also bullish on Tactile Systems Technology, Inc. (NASDAQ:TCMD), allocating a large percentage of their portfolios to this stock.

Since Tactile Systems Technology, Inc. (NASDAQ:TCMD) has experienced a decline in interest from the smart money, it’s easy to see that there is a sect of money managers that elected to cut their full holdings heading into Q3. Interestingly, Renaissance Technologies sold off the biggest position of the 750 funds watched by Insider Monkey, totaling close to $6.6 million in call options, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund sold off about $3.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 2 funds heading into Q3.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Tactile Systems Technology, Inc. (NASDAQ:TCMD) but similarly valued. These stocks are Republic Bancorp, Inc. (NASDAQ:RBCAA), Cango Inc. (NYSE:CANG), Piper Jaffray Companies (NYSE:PJC), and Par Pacific Holdings, Inc. (NYSE:PARR). This group of stocks’ market valuations are closest to TCMD’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RBCAA 6 17134 -1
CANG 1 414 -1
PJC 9 50094 1
PARR 14 121798 -2
Average 7.5 47360 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $61 million in TCMD’s case. Par Pacific Holdings, Inc. (NYSE:PARR) is the most popular stock in this table. On the other hand Cango Inc. (NYSE:CANG) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Tactile Systems Technology, Inc. (NASDAQ:TCMD) is more popular among hedge funds. 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. Unfortunately TCMD wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TCMD were disappointed as the stock returned -25.7% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.

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

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