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Hedge Funds Have Never Been This Bullish On Tiffany & Co. (TIF)

In this article we will check out the progression of hedge fund sentiment towards Tiffany & Co. (NYSE:TIF) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Tiffany & Co. (NYSE:TIF) investors should pay attention to an increase in hedge fund interest in recent months. Our calculations also showed that TIF 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.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

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, Europe is set to become the world’s largest cannabis market, so we checked out this European marijuana stock pitch. Also, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“.  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. Keeping this in mind we’re going to review the fresh hedge fund action regarding Tiffany & Co. (NYSE:TIF).

What have hedge funds been doing with Tiffany & Co. (NYSE:TIF)?

At the end of the first quarter, a total of 69 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the previous quarter. On the other hand, there were a total of 30 hedge funds with a bullish position in TIF a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

Is TIF A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Pentwater Capital Management, managed by Matthew Halbower, holds the largest position in Tiffany & Co. (NYSE:TIF). Pentwater Capital Management has a $261.8 million position in the stock, comprising 4.3% of its 13F portfolio. On Pentwater Capital Management’s heels is York Capital Management, managed by James Dinan, which holds a $207 million position; 12.3% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish consist of Clint Carlson’s Carlson Capital, D. E. Shaw’s D E Shaw and Carl Tiedemann and Michael Tiedemann’s TIG Advisors. In terms of the portfolio weights assigned to each position Athos Capital allocated the biggest weight to Tiffany & Co. (NYSE:TIF), around 14.85% of its 13F portfolio. Sand Grove Capital Partners is also relatively very bullish on the stock, earmarking 14.08 percent of its 13F equity portfolio to TIF.

As aggregate interest increased, key money managers were leading the bulls’ herd. TIG Advisors, managed by Carl Tiedemann and Michael Tiedemann, assembled the largest position in Tiffany & Co. (NYSE:TIF). TIG Advisors had $167.8 million invested in the company at the end of the quarter. Richard Gerson and Navroz D. Udwadia’s Falcon Edge Capital also made a $94.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Steven Clark’s Omni Partners, Renaissance Technologies, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s now review hedge fund activity in other stocks similar to Tiffany & Co. (NYSE:TIF). We will take a look at Keysight Technologies Inc (NYSE:KEYS), Nasdaq, Inc. (NASDAQ:NDAQ), Old Dominion Freight Line (NASDAQ:ODFL), and Corning Incorporated (NYSE:GLW). All of these stocks’ market caps resemble TIF’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KEYS 40 990732 -9
NDAQ 26 112042 1
ODFL 33 347639 -1
GLW 30 106293 -5
Average 32.25 389177 -3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.25 hedge funds with bullish positions and the average amount invested in these stocks was $389 million. That figure was $2916 million in TIF’s case. Keysight Technologies Inc (NYSE:KEYS) is the most popular stock in this table. On the other hand Nasdaq, Inc. (NASDAQ:NDAQ) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Tiffany & Co. (NYSE:TIF) is more popular among hedge funds. 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 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. Unfortunately TIF wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on TIF were disappointed as the stock returned -3.4% during the second quarter (through May 22nd) 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 most of these stocks already outperformed the market in 2020.

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