Is Target Corporation (TGT) A Good Stock To Buy?

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make a proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Target Corporation (NYSE:TGT) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 44 hedge funds’ portfolios at the end of the third quarter of 2015. At the end of this article we will also compare TGT to other stocks, including BlackRock, Inc. (NYSE:BLK), HDFC Bank Limited (ADR) (NYSE:HDB), and The Dow Chemical Company (NYSE:DOW) to get a better sense of its popularity.

According to most investors, hedge funds are viewed as underperforming, outdated investment tools of years past. While there are greater than 8000 funds in operation at the moment, Our researchers look at the crème de la crème of this club, approximately 700 funds. These money managers shepherd the majority of the smart money’s total asset base, and by paying attention to their unrivaled stock picks, Insider Monkey has brought to light numerous investment strategies that have historically surpassed the market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Keeping this in mind, we’re going to check out the key action encompassing Target Corporation (NYSE:TGT).

How are hedge funds trading Target Corporation (NYSE:TGT)?

At the end of the third quarter, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, unchanged over the quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Columbus Circle Investors, managed by Clifford Fox, holds the biggest position in Target Corporation (NYSE:TGT). Columbus Circle Investors has a $236.6 million position in the stock, comprising 1.9% of its 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which holds a $235.8 million position; 0.5% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish consist of Ken Griffin’s Citadel Investment Group, John A. Levin’s Levin Capital Strategies and Phill Gross and Robert Atchinson’s Adage Capital Management.

Seeing as Target Corporation (NYSE:TGT) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there exists a select few hedgies that decided to sell off their positions entirely last quarter. Intriguingly, Benjamin A. Smith’s Laurion Capital Management cut the largest position of the 700 funds monitored by Insider Monkey, totaling close to $49.2 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund cut about $7.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Target Corporation (NYSE:TGT). We will take a look at BlackRock, Inc. (NYSE:BLK), HDFC Bank Limited (ADR) (NYSE:HDB), The Dow Chemical Company (NYSE:DOW), and Thermo Fisher Scientific Inc. (NYSE:TMO). This group of stocks’ market caps resemble TGT’s market cap.

As you can see these stocks had an average of 43 hedge funds with bullish positions and the average amount invested in these stocks was $2.82 billion, compared to $1.45 billion in TGT’s case. The Dow Chemical Company (NYSE:DOW) is the most popular stock in this table, while HDFC Bank Limited (ADR) (NYSE:HDB) is the least popular one with only 29 bullish hedge fund positions. Target Corporation (NYSE:TGT) 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. In this regard DOW might be a better candidate to consider a long position.