At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Tilray, Inc. (NASDAQ:TLRY).
Tilray, Inc. (NASDAQ:TLRY) was in 14 hedge funds’ portfolios at the end of March. TLRY has experienced a decrease in hedge fund sentiment recently. There were 15 hedge funds in our database with TLRY positions at the end of the previous quarter. Our calculations also showed that TLRY 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 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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a look at the fresh hedge fund action regarding Tilray, Inc. (NASDAQ:TLRY).
Hedge fund activity in Tilray, Inc. (NASDAQ:TLRY)
At Q1’s end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in TLRY a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in Tilray, Inc. (NASDAQ:TLRY), which was worth $15 million at the end of the third quarter. On the second spot was Millennium Management which amassed $13.1 million worth of shares. Antara Capital, Moore Global Investments, and Think Investments 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 Think Investments allocated the biggest weight to Tilray, Inc. (NASDAQ:TLRY), around 0.57% of its 13F portfolio. Moore Global Investments is also relatively very bullish on the stock, designating 0.07 percent of its 13F equity portfolio to TLRY.
Since Tilray, Inc. (NASDAQ:TLRY) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there were a few fund managers that elected to cut their positions entirely heading into Q4. Intriguingly, Nancy Zevenbergen’s Zevenbergen Capital Investments cut the largest position of all the hedgies tracked by Insider Monkey, comprising about $8.2 million in stock. Warren Lammert’s fund, Granite Point Capital, also sold off its stock, about $5.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Tilray, Inc. (NASDAQ:TLRY). These stocks are Materion Corp (NYSE:MTRN), The Providence Service Corporation (NASDAQ:PRSC), Transocean Ltd (NYSE:RIG), and Granite Construction Incorporated (NYSE:GVA). This group of stocks’ market valuations match TLRY’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $92 million. That figure was $20 million in TLRY’s case. Transocean Ltd (NYSE:RIG) is the most popular stock in this table. On the other hand The Providence Service Corporation (NASDAQ:PRSC) is the least popular one with only 11 bullish hedge fund positions. Tilray, Inc. (NASDAQ:TLRY) is not the least popular stock in this group but hedge fund interest is still below average. 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on TLRY, though not to the same extent, as the stock returned 24.3% during the second quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.