These Hedge Funds Dumped Tiffany & Co. (TIF) Too Soon

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Tiffany & Co. (NYSE:TIF) based on that data.

Is Tiffany & Co. (NYSE:TIF) a cheap stock to buy now? The smart money was taking a bearish view. The number of long hedge fund positions dropped by 3 recently. Tiffany & Co. (NYSE:TIF) was in 61 hedge funds’ portfolios at the end of September. 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 Q3 rankings and see the video for a quick look at the top 5 stocks). There were 64 hedge funds in our database with TIF holdings at the end of June.

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

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Matthew Halbower Pentwater Capital

Matthew Halbower of Pentwater Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 15 best blue chip stocks to buy 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. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to go over the key hedge fund action encompassing Tiffany & Co. (NYSE:TIF).

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

At Q3’s end, a total of 61 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the previous quarter. On the other hand, there were a total of 32 hedge funds with a bullish position in TIF a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Matthew Halbower’s Pentwater Capital Management has the biggest position in Tiffany & Co. (NYSE:TIF), worth close to $512.5 million, accounting for 6.6% of its total 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $184.9 million call position; the fund has 0.2% of its 13F portfolio invested in the stock. Other peers that hold long positions consist of Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and Richard Gerson and Navroz D. Udwadia’s Falcon Edge Capital. In terms of the portfolio weights assigned to each position Sand Grove Capital Partners allocated the biggest weight to Tiffany & Co. (NYSE:TIF), around 37.33% of its 13F portfolio. Twin Capital Management is also relatively very bullish on the stock, dishing out 17.6 percent of its 13F equity portfolio to TIF.

Judging by the fact that Tiffany & Co. (NYSE:TIF) has experienced falling interest from the entirety of the hedge funds we track, we can see that there is a sect of hedgies who were dropping their full holdings in the third quarter. Interestingly, Stuart Powers’s Hengistbury Investment Partners dropped the biggest position of all the hedgies tracked by Insider Monkey, valued at about $25.1 million in stock. Ben Levine, Andrew Manuel and Stefan Renold’s fund, LMR Partners, also dropped its stock, about $24.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Tiffany & Co. (NYSE:TIF) but similarly valued. These stocks are Wix.Com Ltd (NASDAQ:WIX), PerkinElmer, Inc. (NYSE:PKI), Tyler Technologies, Inc. (NYSE:TYL), Nomura Holdings, Inc. (NYSE:NMR), Royal Caribbean Group (NYSE:RCL), Sun Communities Inc (NYSE:SUI), and Extra Space Storage, Inc. (NYSE:EXR). This group of stocks’ market values are closest to TIF’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WIX 36 1104994 9
PKI 36 1750632 6
TYL 31 520210 -5
NMR 6 18282 1
RCL 30 418133 -1
SUI 31 350701 1
EXR 27 280182 0
Average 28.1 634733 1.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.1 hedge funds with bullish positions and the average amount invested in these stocks was $635 million. That figure was $2294 million in TIF’s case. Wix.Com Ltd (NASDAQ:WIX) is the most popular stock in this table. On the other hand Nomura Holdings, Inc. (NYSE:NMR) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Tiffany & Co. (NYSE:TIF) is more popular among hedge funds. Our overall hedge fund sentiment score for TIF is 78.5. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 31.6% in 2020 through December 2nd but still managed to beat the market by 16 percentage points. Hedge funds were also right about betting on TIF as the stock returned 13.9% since the end of September (through 12/2) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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