Hedge Funds Aren’t Done Buying Tech Data Corp (TECD)

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Tech Data Corp (NASDAQ:TECD) based on that data.

Tech Data Corp (NASDAQ:TECD) was in 39 hedge funds’ portfolios at the end of the first quarter of 2020. TECD has seen an increase in hedge fund interest in recent months. There were 34 hedge funds in our database with TECD holdings at the end of the previous quarter. Our calculations also showed that TECD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most traders, hedge funds are seen as underperforming, outdated financial vehicles of yesteryear. While there are over 8000 funds trading today, Our researchers look at the upper echelon of this club, around 850 funds. It is estimated that this group of investors preside over most of all hedge funds’ total capital, and by paying attention to their matchless picks, Insider Monkey has discovered a number of investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Matthew Halbower Pentwater Capital

Matthew Halbower of Pentwater Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to review the recent hedge fund action surrounding Tech Data Corp (NASDAQ:TECD).

What does smart money think about Tech Data Corp (NASDAQ:TECD)?

At the end of the first quarter, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TECD over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, TIG Advisors held the most valuable stake in Tech Data Corp (NASDAQ:TECD), which was worth $131 million at the end of the third quarter. On the second spot was Water Island Capital which amassed $120.7 million worth of shares. Alpine Associates, Pentwater Capital Management, and TOMS Capital 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 Beryl Capital Management allocated the biggest weight to Tech Data Corp (NASDAQ:TECD), around 13.69% of its 13F portfolio. Water Island Capital is also relatively very bullish on the stock, designating 8.72 percent of its 13F equity portfolio to TECD.

Now, specific money managers have been driving this bullishness. TIG Advisors, managed by Carl Tiedemann and Michael Tiedemann, assembled the biggest position in Tech Data Corp (NASDAQ:TECD). TIG Advisors had $131 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $21.4 million investment in the stock during the quarter. The other funds with brand new TECD positions are Benjamin Pass’s TOMS Capital, James Dinan’s York Capital Management, and Steven Clark’s Omni Partners.

Let’s go over hedge fund activity in other stocks similar to Tech Data Corp (NASDAQ:TECD). We will take a look at Old Republic International Corporation (NYSE:ORI), Caesars Entertainment Corp (NASDAQ:CZR), HD Supply Holdings Inc (NASDAQ:HDS), and Euronet Worldwide, Inc. (NASDAQ:EEFT). This group of stocks’ market valuations are closest to TECD’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ORI 27 241456 7
CZR 47 2040793 1
HDS 40 856283 2
EEFT 30 240212 -17
Average 36 844686 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $845 million. That figure was $797 million in TECD’s case. Caesars Entertainment Corp (NASDAQ:CZR) is the most popular stock in this table. On the other hand Old Republic International Corporation (NYSE:ORI) is the least popular one with only 27 bullish hedge fund positions. Tech Data Corp (NASDAQ:TECD) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately TECD wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on TECD were disappointed as the stock returned 4.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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