A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Toronto-Dominion Bank (NYSE:TD).
Is TD a good stock to buy now? Hedge fund interest in Toronto-Dominion Bank (NYSE:TD) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that TD 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Intuitive Surgical, Inc. (NASDAQ:ISRG), British American Tobacco plc (NYSE:BTI), and Mondelez International Inc (NASDAQ:MDLZ) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most shareholders, hedge funds are viewed as unimportant, outdated investment vehicles of years past. While there are over 8000 funds with their doors open today, Our researchers look at the masters of this club, about 850 funds. Most estimates calculate that this group of people direct the majority of the hedge fund industry’s total capital, and by tailing their inimitable equity investments, Insider Monkey has unearthed several investment strategies that have historically outrun the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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. With all of this in mind we’re going to take a look at the fresh hedge fund action encompassing Toronto-Dominion Bank (NYSE:TD).
Do Hedge Funds Think TD Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in TD over the last 21 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
The largest stake in Toronto-Dominion Bank (NYSE:TD) was held by Heathbridge Capital Management, which reported holding $24 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $19.2 million position. Other investors bullish on the company included Citadel Investment Group, GLG Partners, and Marshall Wace LLP. In terms of the portfolio weights assigned to each position Heathbridge Capital Management allocated the biggest weight to Toronto-Dominion Bank (NYSE:TD), around 9.36% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, earmarking 0.33 percent of its 13F equity portfolio to TD.
Seeing as Toronto-Dominion Bank (NYSE:TD) has faced falling interest from the smart money, logic holds that there exists a select few money managers that elected to cut their full holdings by the end of the third quarter. Intriguingly, Renaissance Technologies said goodbye to the biggest stake of the 750 funds monitored by Insider Monkey, valued at close to $24.1 million in stock. D. E. Shaw’s fund, D E Shaw, also said goodbye to its stock, about $1.4 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 – not necessarily in the same industry as Toronto-Dominion Bank (NYSE:TD) but similarly valued. We will take a look at Intuitive Surgical, Inc. (NASDAQ:ISRG), British American Tobacco plc (NYSE:BTI), Mondelez International Inc (NASDAQ:MDLZ), Caterpillar Inc. (NYSE:CAT), American Express Company (NYSE:AXP), Diageo plc (NYSE:DEO), and HSBC Holdings plc (NYSE:HSBC). All of these stocks’ market caps are closest to TD’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 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $3872 million. That figure was $97 million in TD’s case. Intuitive Surgical, Inc. (NASDAQ:ISRG) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 7 bullish hedge fund positions. Toronto-Dominion Bank (NYSE:TD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TD is 36.8. 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. 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 still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on TD as the stock returned 23% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.