“Value has performed relatively poorly since the 2017 shift, but we believe challenges to the S&P 500’s dominance are mounting and resulting active opportunities away from the index are growing. At some point, this fault line will break, likely on the back of rising rates, and all investors will be reminded that the best time to diversify away from the winners is when it is most painful. The bargain of capturing long-term value may be short-term pain, but enough is eventually enough and it comes time to harvest the benefits.,” said Clearbridge Investments in its market commentary. We aren’t sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Take-Two Interactive Software, Inc. (NASDAQ:TTWO) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Based on the latest hedge fund trading data, it’s clear that the best investors in the world very much do believe in Take-Two. The video game developer’s stock was in the portfolios of 56 of the hedge funds tracked by Insider Monkey’s database, up from 48 a quarter earlier. Take-Two also ranked as one of the 25 Stocks Billionaires Are Piling On, being owned by billionaire money managers like Ken Griffin’s Citadel Investment (2.55 million shares) and Steve Cohen’s Point72 Asset Management (1.85 million shares). Margate Capital’s Samantha Greenberg pitched Take-Two at the Delivering Alpha conference in July, praising the company for its revenue growth and switch to a recurring revenue model through microtransactions. Take-Two CEO Strauss Zelnick declared last November that all future games released by the company would include such recurring revenue models.
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 17.4% year to date and outperformed the market by more than 14 percentage points this year. This strategy also outperformed the market by 3 percentage points in the fourth quarter despite the market volatility (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to go over the latest hedge fund action encompassing Take-Two Interactive Software, Inc. (NASDAQ:TTWO).
Hedge fund activity in Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
At Q3’s end, a total of 56 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 17% increase from the second quarter of 2018. By comparison, 50 hedge funds held shares or bullish call options in TTWO heading into this year. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Take-Two Interactive Software, Inc. (NASDAQ:TTWO), which was worth $301.6 million at the end of the second quarter. On the second spot was Point72 Asset Management which had amassed $219 million worth of shares. Moreover, IBIS Capital Partners, Latimer Light Capital, and Newbrook Capital Advisors were also bullish on Take-Two Interactive Software, Inc. (NASDAQ:TTWO), allocating a large percentage of their 13F portfolios to this stock.
With general bullishness amongst the heavyweights, some big names were breaking ground themselves. Valinor Management LLC, managed by David Gallo, initiated the most valuable position in Take-Two Interactive Software, Inc. (NASDAQ:TTWO), worth $122.6 million. Christopher Lord’s Criterion Capital also initiated a $46.5 million position during the quarter. The following funds were also among the new TTWO investors: Bijan Modanlou, Joseph Bou-Saba, and Jayaveera Kodali’s Alta Park Capital, Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management, and Rob Citrone’s Discovery Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Take-Two Interactive Software, Inc. (NASDAQ:TTWO) but similarly valued. We will take a look at Fortis Inc. (NYSE:FTS), Genuine Parts Company (NYSE:GPC), and Tapestry, Inc. (NYSE:TPR). All of these stocks’ market caps match TTWO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FTS | 14 | 186388 | 3 |
| GPC | 16 | 211810 | -1 |
| TPR | 25 | 614184 | -3 |
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $337 million. That figure was $2.27 billion in TTWO’s case. Tapestry, Inc. (NYSE:TPR) is the most popular stock in this table. On the other hand FTS is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is more popular among hedge funds. Considering that hedge funds are extremely fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
