Do Hedge Funds Love Target Corporation (TGT)?

Is Target Corporation (NYSE:TGT) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They sometimes fail miserably but historically their consensus stock picks outperformed the market after adjusting for known risk factors.

Is Target Corporation (NYSE:TGT) the right investment to pursue these days? Prominent investors are taking an optimistic view. The number of long hedge fund bets improved by 8 lately. Our calculations also showed that TGT isn’t among the 30 most popular stocks among hedge funds.

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 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

We’re going to take a peek at the key hedge fund action surrounding Target Corporation (NYSE:TGT).

How have hedgies been trading Target Corporation (NYSE:TGT)?

Heading into the fourth quarter of 2018, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in TGT over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with TGT Positions

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John Overdeck and David Siegel’s Two Sigma Advisors has the most valuable position in Target Corporation (NYSE:TGT), worth close to $449.1 million, accounting for 1.1% of its total 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which holds a $374 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions comprise D. E. Shaw’s D E Shaw, and Ken Griffin’s Citadel Investment Group.

As aggregate interest increased, key money managers have jumped into Target Corporation (NYSE:TGT) headfirst. Junto Capital Management, managed by James Parsons, initiated the most outsized position in Target Corporation (NYSE:TGT). Junto Capital Management had $71.7 million invested in the company at the end of the quarter. Principal Global Investors’s Columbus Circle Investors also initiated a $20.7 million position during the quarter. The other funds with brand new TGT positions are Matthew Tewksbury’s Stevens Capital Management, Robert Pohly’s Samlyn Capital, and Robert Pohly’s Samlyn Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Target Corporation (NYSE:TGT) but similarly valued. We will take a look at Praxair, Inc. (NYSE:PX), Carnival plc (NYSE:CUK), Crown Castle International Corp. (NYSE:CCI), and Dominion Energy, Inc. (NYSE:D). This group of stocks’ market caps are similar to TGT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PX 41 1693450 -4
CUK 8 57045 0
CCI 32 1800656 5
D 27 475591 -1
Average 27 1006686 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $1.01 billion. That figure was $1.97 billion in TGT’s case. Praxair, Inc. (NYSE:PX) is the most popular stock in this table. On the other hand Carnival plc (NYSE:CUK) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Target Corporation (NYSE:TGT) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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