Is Tetra Tech, Inc. (NASDAQ:TTEK) a sound stock to buy now? Investors who are in the know are getting less optimistic. The number of bullish hedge fund bets were cut by 3 lately.
According to most shareholders, hedge funds are assumed to be unimportant, old financial vehicles of the past. While there are over 8000 funds with their doors open today, we at Insider Monkey choose to focus on the crème de la crème of this group, about 450 funds. Most estimates calculate that this group oversees most of the hedge fund industry’s total asset base, and by paying attention to their best stock picks, we have determined a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Equally as important, positive insider trading sentiment is a second way to break down the stock market universe. There are plenty of reasons for an upper level exec to downsize shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this strategy if shareholders understand where to look (learn more here).
Now, let’s take a look at the recent action surrounding Tetra Tech, Inc. (NASDAQ:TTEK).
What does the smart money think about Tetra Tech, Inc. (NASDAQ:TTEK)?
Heading into Q2, a total of 13 of the hedge funds we track held long positions in this stock, a change of -19% from the first quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes significantly.
When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the biggest position in Tetra Tech, Inc. (NASDAQ:TTEK), worth close to $34.9 million, accounting for 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Craig C. Albert of Sheffield Asset Management, with a $8 million position; the fund has 2% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include John I. Dickerson’s Summit Global Management, Ken Griffin’s Citadel Investment Group and Andy Redleaf’s Whitebox Advisors.
Since Tetra Tech, Inc. (NASDAQ:TTEK) has experienced declining sentiment from hedge fund managers, logic holds that there was a specific group of fund managers that elected to cut their full holdings last quarter. Interestingly, Ian Simm’s Impax Asset Management cut the largest position of the “upper crust” of funds we key on, comprising close to $21.7 million in stock., and Jim Simons of Renaissance Technologies was right behind this move, as the fund dropped about $10 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 3 funds last quarter.
What do corporate executives and insiders think about Tetra Tech, Inc. (NASDAQ:TTEK)?
Insider purchases made by high-level executives is particularly usable when the company we’re looking at has experienced transactions within the past 180 days. Over the last six-month time frame, Tetra Tech, Inc. (NASDAQ:TTEK) has experienced zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Tetra Tech, Inc. (NASDAQ:TTEK). These stocks are URS Corp (NYSE:URS), AECOM Technology Corp (NYSE:ACM), The Shaw Group Inc. (NYSE:SHAW), CACI International Inc (NYSE:CACI), and Stantec Inc. (USA) (NYSE:STN). This group of stocks belong to the technical services industry and their market caps are closest to TTEK’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|URS Corp (NYSE:URS)||19||0||5|
|AECOM Technology Corp (NYSE:ACM)||17||0||11|
|The Shaw Group Inc. (NYSE:SHAW)||25||0||8|
|CACI International Inc (NYSE:CACI)||12||0||9|
|Stantec Inc. (USA) (NYSE:STN)||2||0||0|
With the returns demonstrated by the aforementioned research, retail investors must always monitor hedge fund and insider trading sentiment, and Tetra Tech, Inc. (NASDAQ:TTEK) shareholders fit into this picture quite nicely.