Should I Avoid Tiffany & Co. (TIF)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Tiffany & Co. (NYSE:TIF) and determine whether hedge funds skillfully traded this stock.

Is Tiffany & Co. (NYSE:TIF) an excellent investment today? The smart money was turning less bullish. The number of bullish hedge fund positions retreated by 5 lately. Tiffany & Co. (NYSE:TIF) was in 64 hedge funds’ portfolios at the end of June. The all time high for this statistics is 69. Our calculations also showed that TIF isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 69 hedge funds in our database with TIF positions at the end of the first quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are plenty of signals stock traders have at their disposal to grade stocks. A duo of the best signals are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can beat the broader indices by a significant margin (see the details here).

Curtis Schenker of Scoggin

At Insider Monkey we scour multiple sources to uncover the next great investment idea. 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 precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind let’s take a look at the latest hedge fund action surrounding Tiffany & Co. (NYSE:TIF).

Hedge fund activity in Tiffany & Co. (NYSE:TIF)

At Q2’s end, a total of 64 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards TIF over the last 20 quarters. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

The largest stake in Tiffany & Co. (NYSE:TIF) was held by Pentwater Capital Management, which reported holding $396.9 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $162.2 million position. Other investors bullish on the company included Alpine Associates, Citadel Investment Group, and Carlson Capital. In terms of the portfolio weights assigned to each position Hunting Hill Global Capital allocated the biggest weight to Tiffany & Co. (NYSE:TIF), around 18.34% of its 13F portfolio. Sand Grove Capital Partners is also relatively very bullish on the stock, dishing out 17.58 percent of its 13F equity portfolio to TIF.

Judging by the fact that Tiffany & Co. (NYSE:TIF) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there is a sect of fund managers who were dropping their full holdings last quarter. It’s worth mentioning that Guardian Capital’s GuardCap Asset Management said goodbye to the largest position of the 750 funds tracked by Insider Monkey, valued at about $62.2 million in stock. Tom Sandell’s fund, Sandell Asset Management, also dumped its stock, about $46.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Tiffany & Co. (NYSE:TIF). We will take a look at Hologic, Inc. (NASDAQ:HOLX), BeiGene, Ltd. (NASDAQ:BGNE), CarMax Inc (NYSE:KMX), Broadridge Financial Solutions, Inc. (NYSE:BR), SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), Ryanair Holdings plc (NASDAQ:RYAAY), and Domino’s Pizza, Inc. (NYSE:DPZ). This group of stocks’ market caps resemble TIF’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HOLX 46 1546938 5
BGNE 13 3356980 2
KMX 46 1420392 9
BR 24 193920 -5
SSNC 65 2274258 8
RYAAY 21 746925 -1
DPZ 47 1746559 2
Average 37.4 1612282 2.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.4 hedge funds with bullish positions and the average amount invested in these stocks was $1612 million. That figure was $2402 million in TIF’s case. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is the most popular stock in this table. On the other hand BeiGene, Ltd. (NASDAQ:BGNE) is the least popular one with only 13 bullish hedge fund positions. Tiffany & Co. (NYSE:TIF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TIF is 76.9. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 28.2% in 2020 through August 24th but beat the market by 20.6 percentage points. Unfortunately TIF wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on TIF were disappointed as the stock returned 4.2% 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 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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