Is Tile Shop Hldgs, Inc. (TTS) Going to Burn These Hedge Funds?

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Tile Shop Hldgs, Inc. (NASDAQ:TTS) was in 12 hedge funds’ portfolio at the end of March. TTS has seen an increase in hedge fund sentiment of late. There were 6 hedge funds in our database with TTS holdings at the end of the previous quarter.

According to most traders, hedge funds are viewed as slow, outdated investment tools of the past. While there are over 8000 funds in operation at the moment, we hone in on the crème de la crème of this group, about 450 funds. It is estimated that this group has its hands on the lion’s share of the hedge fund industry’s total asset base, and by watching their highest performing picks, we have revealed a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Phill Gross

Just as key, bullish insider trading activity is a second way to break down the marketplace. There are a number of incentives for an upper level exec to cut shares of his or her company, but only one, very simple reason why they would buy. Several academic studies have demonstrated the market-beating potential of this method if piggybackers know where to look (learn more here).

Now, it’s important to take a look at the key action encompassing Tile Shop Hldgs, Inc. (NASDAQ:TTS).

Hedge fund activity in Tile Shop Hldgs, Inc. (NASDAQ:TTS)

At Q1’s end, a total of 12 of the hedge funds we track were bullish in this stock, a change of 100% from the first quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings considerably.

Of the funds we track, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the biggest position in Tile Shop Hldgs, Inc. (NASDAQ:TTS). Adage Capital Management has a $7.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Cupps Capital Management, managed by Drew Cupps, which held a $7.1 million position; 0.7% of its 13F portfolio is allocated to the stock. Other hedgies that are bullish include Charles Anderson’s Fox Point Capital Management, Donald Chiboucis’s Columbus Circle Investors and Mark Broach’s Manatuck Hill Partners.

As one would reasonably expect, key hedge funds were breaking ground themselves. Cupps Capital Management, managed by Drew Cupps, initiated the biggest position in Tile Shop Hldgs, Inc. (NASDAQ:TTS). Cupps Capital Management had 7.1 million invested in the company at the end of the quarter. Mark Broach’s Manatuck Hill Partners also made a $3.4 million investment in the stock during the quarter. The following funds were also among the new TTS investors: Michael R. Weisberg’s Crestwood Capital Management, Cliff Asness’s AQR Capital Management, and Jeffrey Vinik’s Vinik Asset Management.

How have insiders been trading Tile Shop Hldgs, Inc. (NASDAQ:TTS)?

Bullish insider trading is most useful when the company in question has seen transactions within the past half-year. Over the last 180-day time period, Tile Shop Hldgs, Inc. (NASDAQ:TTS) has experienced zero unique insiders buying, and 6 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Tile Shop Hldgs, Inc. (NASDAQ:TTS). These stocks are Sabine Royalty Trust (NYSE:SBR), Dorchester Minerals LP (NASDAQ:DMLP), ViewPoint Financial Group (NASDAQ:VPFG), Main Street Capital Corporation (NYSE:MAIN), and Solar Capital Ltd. (NASDAQ:SLRC). This group of stocks are in the diversified investments industry and their market caps resemble TTS’s market cap.

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