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Tailored Brands, Inc. (TLRD): Hedge Funds In Wait-and-See Mode

World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

Hedge fund interest in Tailored Brands, Inc. (NYSE:TLRD) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare TLRD to other stocks including Habit Restaurants Inc (NASDAQ:HABT), LogicBio Therapeutics, Inc. (NASDAQ:LOGC), and Ideanomics, Inc. (NASDAQ:IDEX) to get a better sense of its popularity.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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.

Michael Burry Scion Capital

n addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources  like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Let’s analyze the fresh hedge fund action surrounding Tailored Brands, Inc. (NYSE:TLRD).

How are hedge funds trading Tailored Brands, Inc. (NYSE:TLRD)?

Heading into the third quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in TLRD over the last 16 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

TLRD_nov2019

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Scion Asset Management, managed by Michael Burry, holds the number one position in Tailored Brands, Inc. (NYSE:TLRD). Scion Asset Management has a $10.7 million position in the stock, comprising 11.4% of its 13F portfolio. Sitting at the No. 2 spot is Dmitry Balyasny of Balyasny Asset Management, with a $9.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish consist of Ken Griffin’s Citadel Investment Group, D. E. Shaw’s D E Shaw and Renaissance Technologies.

Due to the fact that Tailored Brands, Inc. (NYSE:TLRD) has faced falling interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of funds that elected to cut their positions entirely in the second quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the biggest position of the “upper crust” of funds tracked by Insider Monkey, valued at about $1.9 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund cut about $0.2 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Tailored Brands, Inc. (NYSE:TLRD) but similarly valued. These stocks are Habit Restaurants Inc (NASDAQ:HABT), LogicBio Therapeutics, Inc. (NASDAQ:LOGC), Ideanomics, Inc. (NASDAQ:IDEX), and First Choice Bancorp (NASDAQ:FCBP). This group of stocks’ market valuations match TLRD’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HABT 12 51066 -2
LOGC 6 128085 0
IDEX 4 236 3
FCBP 1 268 1
Average 5.75 44914 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $42 million in TLRD’s case. Habit Restaurants Inc (NASDAQ:HABT) is the most popular stock in this table. On the other hand First Choice Bancorp (NASDAQ:FCBP) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Tailored Brands, Inc. (NYSE:TLRD) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately TLRD wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TLRD were disappointed as the stock returned -21% during the third quarter 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 many of these stocks already outperformed the market in Q3.

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

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