Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
TTM Technologies, Inc. (NASDAQ:TTMI) investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. TTMI was in 13 hedge funds’ portfolios at the end of March. There were 15 hedge funds in our database with TTMI holdings at the end of the previous quarter. Our calculations also showed that TTMI 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.
Let’s take a glance at the new hedge fund action encompassing TTM Technologies, Inc. (NASDAQ:TTMI).
How are hedge funds trading TTM Technologies, Inc. (NASDAQ:TTMI)?
At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in TTMI a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Point72 Asset Management was the largest shareholder of TTM Technologies, Inc. (NASDAQ:TTMI), with a stake worth $18.2 million reported as of the end of March. Trailing Point72 Asset Management was Royce & Associates, which amassed a stake valued at $13 million. D E Shaw, Citadel Investment Group, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Because TTM Technologies, Inc. (NASDAQ:TTMI) has witnessed bearish sentiment from hedge fund managers, logic holds that there is a sect of fund managers who were dropping their positions entirely in the third quarter. Intriguingly, Israel Englander’s Millennium Management said goodbye to the biggest stake of the “upper crust” of funds followed by Insider Monkey, valued at about $6.5 million in stock, and Andrew Weiss’s Weiss Asset Management was right behind this move, as the fund cut about $3.7 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds in the third quarter.
Let’s go over hedge fund activity in other stocks similar to TTM Technologies, Inc. (NASDAQ:TTMI). We will take a look at 3D Systems Corporation (NYSE:DDD), Twin River Worldwide Holdings Inc. (NYSE:TRWH), Brookdale Senior Living, Inc. (NYSE:BKD), and Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC). This group of stocks’ market caps are similar to TTMI’s market cap.
|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 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $190 million. That figure was $43 million in TTMI’s case. Brookdale Senior Living, Inc. (NYSE:BKD) is the most popular stock in this table. On the other hand Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC) is the least popular one with only 7 bullish hedge fund positions. TTM Technologies, Inc. (NASDAQ:TTMI) 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. 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. Unfortunately TTMI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TTMI investors were disappointed as the stock returned -16.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.