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Hedge Funds Are Buying Tumi Holdings Inc (TUMI)

While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, the low commodity prices and the economic turmoil in China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Tumi Holdings Inc (NYSE:TUMI).

Tumi Holdings Inc (NYSE:TUMI) investors should be aware of an increase in enthusiasm from smart money recently. TUMI was in 16 hedge funds’ portfolios at the end of September. There were 14 hedge funds in our database with TUMI holdings at the end of the previous quarter. At the end of this article we will also compare TUMI to other stocks, including Penumbra Inc (NYSE:PEN), Sonic Corporation (NASDAQ:SONC), and Apollo Education Group Inc (NASDAQ:APOL) to get a better sense of its popularity.

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In the eyes of most stock holders, hedge funds are perceived as slow, outdated investment tools of years past. While there are more than 8000 funds in operation today, We look at the elite of this group, approximately 700 funds. It is estimated that this group of investors orchestrate bulk of the hedge fund industry’s total asset base, and by tracking their finest stock picks, Insider Monkey has deciphered a few investment strategies that have historically outperformed the broader indices. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Now, let’s analyze the new action surrounding Tumi Holdings Inc (NYSE:TUMI).

Hedge fund activity in Tumi Holdings Inc (NYSE:TUMI)

At the Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a rise of 14% from the second quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Bain Capital’s Brookside Capital has the largest position in Tumi Holdings Inc (NYSE:TUMI), worth close to $28.2 million, amounting to 0.8% of its total 13F portfolio. The second largest stake is held by Joel Greenblatt of Gotham Asset Management, with a $13.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions contain Douglas Dossey and Arthur Young’s Tensile Capital, Steve Cohen’s Point72 Asset Management and Eric Bannasch’s Cadian Capital.

As industrywide interest jumped, some big names were breaking ground themselves. Lee Munder Capital Group, managed by Lee Munder, assembled the biggest position in Tumi Holdings Inc (NYSE:TUMI). According to its latest 13F filing, the fund had $3.4 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $1.9 million position during the quarter. The following funds were also among the new TUMI investors: Benjamin A. Smith’s Laurion Capital Management and George Hall’s Clinton Group.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Tumi Holdings Inc (NYSE:TUMI) but similarly valued. These stocks are Penumbra Inc (NYSE:PEN), Sonic Corporation (NASDAQ:SONC), Apollo Education Group Inc (NASDAQ:APOL), and Cott Corporation (USA) (NYSE:COT). This group of stocks’ market values are closest to TUMI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PEN 13 91595 13
SONC 30 204992 6
APOL 25 324765 -2
COT 23 256133 4

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $219 million. TUMI only managed to attract $106 million from hedge funds. Sonic Corporation (NASDAQ:SONC) is the most popular stock in this table, while Penumbra Inc (NYSE:PEN) is the laggard with only 13 bullish hedge fund positions. Tumi Holdings Inc (NYSE:TUMI) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SONC might be a better candidate to consider a long position.

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