In this article we will analyze whether Tactile Systems Technology, Inc. (NASDAQ:TCMD) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is TCMD a good stock to buy now? Tactile Systems Technology, Inc. (NASDAQ:TCMD) has seen an increase in enthusiasm from smart money lately. Tactile Systems Technology, Inc. (NASDAQ:TCMD) was in 15 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 17. Our calculations also showed that TCMD isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 today’s marketplace there are dozens of indicators investors can use to analyze their holdings. Two of the best indicators are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can beat the S&P 500 by a solid amount (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to take a look at the fresh hedge fund action regarding Tactile Systems Technology, Inc. (NASDAQ:TCMD).
Do Hedge Funds Think TCMD Is A Good Stock To Buy Now?
At third quarter’s end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in TCMD over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Marshall Wace LLP held the most valuable stake in Tactile Systems Technology, Inc. (NASDAQ:TCMD), which was worth $8.8 million at the end of the third quarter. On the second spot was Millennium Management which amassed $7.6 million worth of shares. Point72 Asset Management, Renaissance Technologies, and Citadel Investment Group 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 SG Capital Management allocated the biggest weight to Tactile Systems Technology, Inc. (NASDAQ:TCMD), around 0.56% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, earmarking 0.5 percent of its 13F equity portfolio to TCMD.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Point72 Asset Management, managed by Steve Cohen, established the most outsized position in Tactile Systems Technology, Inc. (NASDAQ:TCMD). Point72 Asset Management had $7.3 million invested in the company at the end of the quarter. Ken Grossman and Glen Schneider’s SG Capital Management also initiated a $2 million position during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’s Tudor Investment Corp, Roger Ibbotson’s Zebra Capital Management, and Schonfeld Strategic Advisors.
Let’s also examine hedge fund activity in other stocks similar to Tactile Systems Technology, Inc. (NASDAQ:TCMD). These stocks are Zumiez Inc. (NASDAQ:ZUMZ), H&E Equipment Services, Inc. (NASDAQ:HEES), Kforce Inc. (NASDAQ:KFRC), Everi Holdings Inc (NYSE:EVRI), Phibro Animal Health Corp (NASDAQ:PAHC), IMAX Corporation (NYSE:IMAX), and Limelight Networks, Inc. (NASDAQ:LLNW). This group of stocks’ market caps are closest to TCMD’s market cap.
|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 18.4 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $40 million in TCMD’s case. Everi Holdings Inc (NYSE:EVRI) is the most popular stock in this table. On the other hand H&E Equipment Services, Inc. (NASDAQ:HEES) is the least popular one with only 14 bullish hedge fund positions. Tactile Systems Technology, Inc. (NASDAQ:TCMD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TCMD is 36.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately TCMD wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TCMD investors were disappointed as the stock returned 1.1% since the end of September (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.