Is TETRA Technologies, Inc. (NYSE:TTI) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
TETRA Technologies, Inc. (NYSE:TTI) shareholders have witnessed an increase in hedge fund sentiment of late. TTI was in 18 hedge funds’ portfolios at the end of the third quarter of 2018. There were 14 hedge funds in our database with TTI positions at the end of the previous quarter. Our calculations also showed that tti isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s analyze the fresh hedge fund action encompassing TETRA Technologies, Inc. (NYSE:TTI).
What have hedge funds been doing with TETRA Technologies, Inc. (NYSE:TTI)?
Heading into the fourth quarter of 2018, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 29% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TTI over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in TETRA Technologies, Inc. (NYSE:TTI). Renaissance Technologies has a $8.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Huber Capital Management, managed by Joe Huber, which holds a $7.1 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions contain D. E. Shaw’s D E Shaw, and Till Bechtolsheimer’s Arosa Capital Management.
As aggregate interest increased, specific money managers were leading the bulls’ herd. SIR Capital Management, managed by Vince Maddi and Shawn Brennan, initiated the largest position in TETRA Technologies, Inc. (NYSE:TTI). SIR Capital Management had $0.5 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0.2 million position during the quarter. The other funds with brand new TTI positions are Mike Vranos’s Ellington and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as TETRA Technologies, Inc. (NYSE:TTI) but similarly valued. These stocks are Aurinia Pharmaceuticals Inc (NASDAQ:AUPH), Domo Inc. (NASDAQ:DOMO), Franklin Financial Network Inc (NYSE:FSB), and Gladstone Commercial Corporation (NASDAQ:GOOD). This group of stocks’ market valuations are closest to TTI’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $29 million in TTI’s case. Domo Inc. (NASDAQ:DOMO) is the most popular stock in this table. On the other hand Franklin Financial Network Inc (NYSE:FSB) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks TETRA Technologies, Inc. (NYSE:TTI) is more popular among hedge funds. Considering that hedge funds are 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.