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Is Titan Machinery Inc. (TITN) A Good Stock To Buy?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Titan Machinery Inc. (NASDAQ:TITN).

Titan Machinery Inc. (NASDAQ:TITN) investors should be aware of a decrease in hedge fund interest lately. Our calculations also showed that TITN isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

Let’s take a look at the recent hedge fund action encompassing Titan Machinery Inc. (NASDAQ:TITN).

What does smart money think about Titan Machinery Inc. (NASDAQ:TITN)?

At the end of the first quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in TITN a year ago. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

No of Hedge Funds with TITN Positions

Among these funds, Rutabaga Capital Management held the most valuable stake in Titan Machinery Inc. (NASDAQ:TITN), which was worth $4.5 million at the end of the first quarter. On the second spot was Point72 Asset Management which amassed $3.1 million worth of shares. Moreover, Point72 Asset Management, Two Sigma Advisors, and Renaissance Technologies were also bullish on Titan Machinery Inc. (NASDAQ:TITN), allocating a large percentage of their portfolios to this stock.

Seeing as Titan Machinery Inc. (NASDAQ:TITN) has witnessed bearish sentiment from hedge fund managers, we can see that there lies a certain “tier” of hedgies who sold off their full holdings heading into Q3. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP dumped the largest position of all the hedgies tracked by Insider Monkey, totaling about $1.6 million in stock. Andrew Feldstein and Stephen Siderow’s fund, Blue Mountain Capital, also dumped its stock, about $0.8 million worth. These moves are important to note, as aggregate hedge fund interest fell by 3 funds heading into Q3.

Let’s go over hedge fund activity in other stocks similar to Titan Machinery Inc. (NASDAQ:TITN). We will take a look at Artesian Resources Corporation (NASDAQ:ARTNA), Tuscan Holdings Corp. (NASDAQ:THCB), PrimeEnergy Resources Corporation (NASDAQ:PNRG), and Guaranty Bancshares, Inc. (NASDAQ:GNTY). All of these stocks’ market caps resemble TITN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ARTNA 3 17145 -2
THCB 8 35955 8
PNRG 2 801 2
GNTY 4 8967 0
Average 4.25 15717 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $18 million in TITN’s case. Tuscan Holdings Corp. (NASDAQ:THCB) is the most popular stock in this table. On the other hand PrimeEnergy Resources Corporation (NASDAQ:PNRG) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Titan Machinery Inc. (NASDAQ:TITN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on TITN as the stock returned 14.7% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

Disclosure: None. This article was originally published at Insider Monkey.

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