Toronto-Dominion Bank (TD) Fell Out Of Favor With Hedge Funds

We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article, we look at what those funds think of Toronto-Dominion Bank (NYSE:TD) based on that data.

Toronto-Dominion Bank (NYSE:TD) has seen a decrease in hedge fund interest in recent months. Toronto-Dominion Bank (NYSE:TD) was in 19 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 22. There were 22 hedge funds in our database with TD positions at the end of the fourth quarter. Our calculations also showed that TD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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Robert Richards of Heathbridge Capital Management

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Do Hedge Funds Think TD Is A Good Stock To Buy Now?

At first quarter’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in TD a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Is TD A Good Stock To Buy?

Among these funds, D E Shaw held the most valuable stake in Toronto-Dominion Bank (NYSE:TD), which was worth $66.6 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $41.5 million worth of shares. GLG Partners, Heathbridge Capital Management, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Heathbridge Capital Management allocated the biggest weight to Toronto-Dominion Bank (NYSE:TD), around 9.44% of its 13F portfolio. Te Ahumairangi Investment Management is also relatively very bullish on the stock, setting aside 0.65 percent of its 13F equity portfolio to TD.

Judging by the fact that Toronto-Dominion Bank (NYSE:TD) has witnessed bearish sentiment from the smart money, we can see that there exists a select few hedgies that slashed their full holdings last quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group dropped the largest investment of the 750 funds watched by Insider Monkey, valued at an estimated $16.9 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund cut about $1.3 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 3 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Toronto-Dominion Bank (NYSE:TD). We will take a look at Deere & Company (NYSE:DE), Raytheon Technologies Corp (NYSE:RTX), Sea Limited (NYSE:SE), General Electric Company (NYSE:GE), BlackRock, Inc. (NYSE:BLK), American Express Company (NYSE:AXP), and PetroChina Company Limited (NYSE:PTR). This group of stocks’ market caps are closest to TD’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DE 51 2047270 -3
RTX 58 2497449 -1
SE 98 10433038 -17
GE 68 6166147 -1
BLK 42 1524856 -11
AXP 53 24475341 -7
PTR 8 73088 3
Average 54 6745313 -5.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 54 hedge funds with bullish positions and the average amount invested in these stocks was $6745 million. That figure was $213 million in TD’s case. Sea Limited (NYSE:SE) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 8 bullish hedge fund positions. Toronto-Dominion Bank (NYSE:TD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TD is 34. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately TD wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TD investors were disappointed as the stock returned 4.1% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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