Does Smart Money Like Take-Two Interactive Software, Inc. (TTWO)?

Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

In this article, we are going to take a closer look at Take-Two Interactive Software, Inc. (NASDAQ:TTWO) and the hedge fund sentiment towards it. Overall, the stock was included in the equity portfolios of 46 funds from our database at the end of the third quarter of 2016, down from 47 funds a quarter earlier. However, the level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Texas Roadhouse Inc (NASDAQ:TXRH), Ubiquiti Networks Inc (NASDAQ:UBNT), and First Horizon National Corporation (NYSE:FHN) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Keeping this in mind, let’s analyze the latest action surrounding Take-Two Interactive Software, Inc. (NASDAQ:TTWO).

How are hedge funds trading Take-Two Interactive Software, Inc. (NASDAQ:TTWO)?

As stated earlier, a total of 46 hedge funds tracked by Insider Monkey held long positions in Take-Two Interactive Software at the end of September, which represents a decline of 2% from the end of the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Take-Two Interactive Software, Inc. (NASDAQ:TTWO). Citadel Investment Group has a $131 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund is Ricky Sandler’s Eminence Capital, with a $119 million position; 2% of its 13F portfolio is allocated to the stock. Other peers that hold long positions consist of Jim Simons’ Renaissance Technologies, Curtis Macnguyen’s Ivory Capital (Investment Mgmt), and David Einhorn’s Greenlight Capital.

Seeing as Take-Two Interactive Software, Inc. (NASDAQ:TTWO) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of money managers that slashed their positions entirely in the third quarter. Intriguingly, Charles Davidson’s Wexford Capital dropped the largest position of the “upper crust” of funds tracked by Insider Monkey, comprising about $3.7 million in stock, and Matthew Tewksbury’s Stevens Capital Management was right behind this move, as the fund sold off about $2.4 million worth of shares.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Take-Two Interactive Software, Inc. (NASDAQ:TTWO) but similarly valued. These stocks are Texas Roadhouse Inc (NASDAQ:TXRH), Ubiquiti Networks Inc (NASDAQ:UBNT), First Horizon National Corporation (NYSE:FHN), and Huntsman Corporation (NYSE:HUN). All of these stocks’ market caps match TTWO’s market cap.

As you can see these stocks had an average of 24 funds with bullish positions and the average amount invested in these stocks was $321 million. That figure was $1.23 billion in TTWO’s case. Huntsman Corporation (NYSE:HUN) is the most popular stock in this table with 42 funds holding shares. On the other hand, Ubiquiti Networks Inc (NASDAQ:UBNT) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Take-Two Interactive Software, Inc. (NASDAQ:TTWO) 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.