Hedge Funds Are Crazy About Turning Point Brands, Inc. (TPB)

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Turning Point Brands, Inc. (NYSE:TPB).

Turning Point Brands, Inc. (NYSE:TPB) has experienced an increase in activity from the world’s largest hedge funds of late. Turning Point Brands, Inc. (NYSE:TPB) was in 25 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 22 hedge funds in our database with TPB holdings at the end of December. Our calculations also showed that TPB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Justin John Ferayorni - Tamarack Capital Management

Justin John Ferayorni of Tamarack Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to check out the recent hedge fund action surrounding Turning Point Brands, Inc. (NYSE:TPB).

Do Hedge Funds Think TPB Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TPB over the last 23 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.

Among these funds, Driehaus Capital held the most valuable stake in Turning Point Brands, Inc. (NYSE:TPB), which was worth $22.9 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $21.2 million worth of shares. Tamarack Capital Management, Millennium Management, and DG Capital Management 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 Tamarack Capital Management allocated the biggest weight to Turning Point Brands, Inc. (NYSE:TPB), around 4.28% of its 13F portfolio. Sabrepoint Capital is also relatively very bullish on the stock, designating 3.84 percent of its 13F equity portfolio to TPB.

As aggregate interest increased, key hedge funds have jumped into Turning Point Brands, Inc. (NYSE:TPB) headfirst. Millennium Management, managed by Israel Englander, established the most valuable position in Turning Point Brands, Inc. (NYSE:TPB). Millennium Management had $21.2 million invested in the company at the end of the quarter. Mark Travis’s Intrepid Capital Management also initiated a $4.4 million position during the quarter. The following funds were also among the new TPB investors: Frank Fu’s CaaS Capital, Matthew L Pinz’s Pinz Capital, and Peter Muller’s PDT Partners.

Let’s also examine hedge fund activity in other stocks similar to Turning Point Brands, Inc. (NYSE:TPB). We will take a look at Ebix Inc (NASDAQ:EBIX), OneSpan Inc. (NASDAQ:OSPN), Phibro Animal Health Corp (NASDAQ:PAHC), Formula One Group (NASDAQ:FWONA), Apria, Inc. (NASDAQ:APR), Funko, Inc. (NASDAQ:FNKO), and General American Investors Company, Inc. (NYSE:GAM). This group of stocks’ market caps are similar to TPB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EBIX 8 15424 -6
OSPN 15 160435 -2
PAHC 10 48834 -4
FWONA 19 235249 -2
APR 11 78178 11
FNKO 14 137414 5
GAM 4 33245 0
Average 11.6 101254 0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $101 million. That figure was $185 million in TPB’s case. Formula One Group (NASDAQ:FWONA) is the most popular stock in this table. On the other hand General American Investors Company, Inc. (NYSE:GAM) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Turning Point Brands, Inc. (NYSE:TPB) is more popular among hedge funds. Our overall hedge fund sentiment score for TPB is 88. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Unfortunately TPB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TPB were disappointed as the stock returned -11.1% since the end of the first quarter (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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