The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Titan Machinery Inc. (NASDAQ:TITN).
Is TITN a good stock to buy now? Money managers were taking a bullish view. The number of bullish hedge fund bets advanced by 5 recently. Titan Machinery Inc. (NASDAQ:TITN) was in 14 hedge funds’ portfolios at the end of September. The all time high for this statistic is 18. Our calculations also showed that TITN 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). There were 9 hedge funds in our database with TITN holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 66 percentage points since March 2017 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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 peek at the key hedge fund action regarding Titan Machinery Inc. (NASDAQ:TITN).
Do Hedge Funds Think TITN Is A Good Stock To Buy Now?
At third quarter’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 56% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in TITN over the last 21 quarters. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in Titan Machinery Inc. (NASDAQ:TITN) was held by Renaissance Technologies, which reported holding $6.3 million worth of stock at the end of September. It was followed by Rutabaga Capital Management with a $4 million position. Other investors bullish on the company included Arrowstreet Capital, Two Sigma Advisors, and GAMCO Investors. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to Titan Machinery Inc. (NASDAQ:TITN), around 2.28% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, dishing out 0.25 percent of its 13F equity portfolio to TITN.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the largest position in Titan Machinery Inc. (NASDAQ:TITN). Marshall Wace LLP had $0.7 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also initiated a $0.3 million position during the quarter. The other funds with brand new TITN positions are Ken Griffin’s Citadel Investment Group, Thomas Bailard’s Bailard Inc, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Titan Machinery Inc. (NASDAQ:TITN) but similarly valued. We will take a look at Pulse Biosciences, Inc (NASDAQ:PLSE), Flushing Financial Corporation (NASDAQ:FFIC), Motorcar Parts of America, Inc. (NASDAQ:MPAA), IMV Inc. (NASDAQ:IMV), Spark Energy, Inc. (NASDAQ:SPKE), Tufin Software Technologies Ltd. (NYSE:TUFN), and Fossil Group Inc (NASDAQ:FOSL). This group of stocks’ market valuations are closest to TITN’s market valuation.
|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 7.4 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $17 million in TITN’s case. Fossil Group Inc (NASDAQ:FOSL) is the most popular stock in this table. On the other hand Pulse Biosciences, Inc (NASDAQ:PLSE) 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 overall hedge fund sentiment score for TITN is 83.3. 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 returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on TITN as the stock returned 47.8% since the end of September (through 12/8) 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.
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Disclosure: None. This article was originally published at Insider Monkey.