Is Tractor Supply Company (TSCO) A Good Stock To Buy?

Is Tractor Supply Company (NASDAQ:TSCO) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Tractor Supply Company (NASDAQ:TSCO) investors should be aware of an increase in hedge fund interest in recent months. TSCO was in 30 hedge funds’ portfolios at the end of September. There were 20 hedge funds in our database with TSCO positions at the end of the previous quarter. At the end of this article we will also compare TSCO to other stocks including Cheniere Energy, Inc. (NYSEAMEX:LNG), Agilent Technologies Inc. (NYSE:A), and Freescale Semiconductor Ltd (NYSE:FSL) to get a better sense of its popularity.

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Now, let’s view the key action surrounding Tractor Supply Company (NASDAQ:TSCO).

How are hedge funds trading Tractor Supply Company (NASDAQ:TSCO)?

Heading into Q4, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Winton Capital Management, managed by David Harding, holds the number one position in Tractor Supply Company (NASDAQ:TSCO). Winton Capital Management has a $54.6 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is Columbus Circle Investors, managed by Clifford Fox, which holds a $35.2 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism include Gabriel Plotkin’s Melvin Capital Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Israel Englander’s Millennium Management.

As one would reasonably expect, specific money managers were breaking ground themselves. Melvin Capital Management, managed by Gabriel Plotkin, assembled the biggest position in Tractor Supply Company (NASDAQ:TSCO). Melvin Capital Management had $23.2 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $4.6 million position during the quarter. The following funds were also among the new TSCO investors: Jim Simons’s Renaissance Technologies, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Tractor Supply Company (NASDAQ:TSCO) but similarly valued. We will take a look at Cheniere Energy, Inc. (NYSEAMEX:LNG), Agilent Technologies Inc. (NYSE:A), Freescale Semiconductor Ltd (NYSE:FSL), and TransDigm Group Incorporated (NYSE:TDG). This group of stocks’ market caps are similar to TSCO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LNG 62 7122951 -14
A 46 1268403 -4
FSL 23 506225 -7
TDG 51 3576295 3

As you can see these stocks had an average of 45.5 hedge funds with bullish positions and the average amount invested in these stocks was $3,118 million. That figure was $237 million in TSCO’s case. Cheniere Energy, Inc. (NYSEAMEX:LNG) is the most popular stock in this table. On the other hand Freescale Semiconductor Ltd (NYSE:FSL) is the least popular one with only 23 bullish hedge fund positions. Tractor Supply Company (NASDAQ:TSCO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LNG might be a better candidate to consider a long position.