Hedge Funds Have Never Been This Bullish On Turning Point Brands, Inc. (TPB)

Does Turning Point Brands, Inc. (NYSE:TPB) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.

Is Turning Point Brands, Inc. (NYSE:TPB) a healthy stock for your portfolio? Prominent investors are buying. The number of long hedge fund bets went up by 6 recently. Our calculations also showed that tpb isn’t among the 30 most popular stocks among hedge funds. TPB was in 16 hedge funds’ portfolios at the end of March. There were 10 hedge funds in our database with TPB holdings at the end of the previous quarter.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Richard Driehaus

Let’s go over the latest hedge fund action surrounding Turning Point Brands, Inc. (NYSE:TPB).

What have hedge funds been doing with Turning Point Brands, Inc. (NYSE:TPB)?

Heading into the second quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 60% from the fourth quarter of 2018. By comparison, 7 hedge funds held shares or bullish call options in TPB a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with TPB Positions

Among these funds, Renaissance Technologies held the most valuable stake in Turning Point Brands, Inc. (NYSE:TPB), which was worth $21.5 million at the end of the first quarter. On the second spot was Sabrepoint Capital which amassed $9.2 million worth of shares. Moreover, Citadel Investment Group, Driehaus Capital, and Sabrepoint Capital were also bullish on Turning Point Brands, Inc. (NYSE:TPB), allocating a large percentage of their portfolios to this stock.

Consequently, specific money managers have been driving this bullishness. Sabrepoint Capital, managed by George Baxter, created the largest call position in Turning Point Brands, Inc. (NYSE:TPB). Sabrepoint Capital had $9.2 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $5.8 million investment in the stock during the quarter. The following funds were also among the new TPB investors: Richard Driehaus’s Driehaus Capital, George McCabe’s Portolan Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s check out hedge fund activity in other stocks similar to Turning Point Brands, Inc. (NYSE:TPB). These stocks are Internet Initiative Japan Inc. (NASDAQ:IIJI), Houghton Mifflin Harcourt Co (NASDAQ:HMHC), H&E Equipment Services, Inc. (NASDAQ:HEES), and BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX). This group of stocks’ market values are closest to TPB’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IIJI 2 4568 0
HMHC 25 248426 6
HEES 13 32587 -2
BCRX 19 358451 1
Average 14.75 161008 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $161 million. That figure was $45 million in TPB’s case. Houghton Mifflin Harcourt Co (NASDAQ:HMHC) is the most popular stock in this table. On the other hand Internet Initiative Japan Inc. (NASDAQ:IIJI) is the least popular one with only 2 bullish hedge fund positions. Turning Point Brands, Inc. (NYSE:TPB) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on TPB as the stock returned 9.2% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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