Was The Smart Money Right About Take-Two Interactive Software, Inc. (TTWO)?

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 fourth 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 Take-Two Interactive Software, Inc. (NASDAQ:TTWO) based on that data.

Take-Two Interactive Software, Inc. (NASDAQ:TTWO) investors should pay attention to an increase in hedge fund interest of late. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) was in 55 hedge funds’ portfolios at the end of December. The all time high for this statistic is 66. Our calculations also showed that TTWO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 124 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Chris Hansen - Valiant Capital

Christopher R. Hansen of Valiant Capital

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

At the end of December, a total of 55 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the previous quarter. By comparison, 59 hedge funds held shares or bullish call options in TTWO a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in Take-Two Interactive Software, Inc. (NASDAQ:TTWO), which was worth $273.3 million at the end of the fourth quarter. On the second spot was Arrowstreet Capital which amassed $142.1 million worth of shares. Holocene Advisors, Polar Capital, and Valiant Capital 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 Tensile Capital allocated the biggest weight to Take-Two Interactive Software, Inc. (NASDAQ:TTWO), around 8.25% of its 13F portfolio. Marlowe Partners is also relatively very bullish on the stock, setting aside 7.37 percent of its 13F equity portfolio to TTWO.

As aggregate interest increased, specific money managers were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, created the biggest position in Take-Two Interactive Software, Inc. (NASDAQ:TTWO). Balyasny Asset Management had $46.1 million invested in the company at the end of the quarter. Tim David’s Guardian Point Capital also initiated a $10.4 million position during the quarter. The other funds with new positions in the stock are Nicholas Bagnall’s Te Ahumairangi Investment Management, Benjamin A. Smith’s Laurion Capital Management, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s now review hedge fund activity in other stocks similar to Take-Two Interactive Software, Inc. (NASDAQ:TTWO). These stocks are Franco-Nevada Corporation (NYSE:FNV), Carnival Corporation & plc (NYSE:CCL), Fortive Corporation (NYSE:FTV), Arthur J. Gallagher & Co. (NYSE:AJG), Edison International (NYSE:EIX), Maxim Integrated Products Inc. (NASDAQ:MXIM), and Rogers Communications Inc. (NYSE:RCI). This group of stocks’ market valuations are closest to TTWO’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FNV 27 1224140 -4
CCL 47 1196934 10
FTV 33 1116808 -1
AJG 24 142669 -11
EIX 30 1441563 2
MXIM 54 2844204 2
RCI 15 279915 0
Average 32.9 1178033 -0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.9 hedge funds with bullish positions and the average amount invested in these stocks was $1178 million. That figure was $1513 million in TTWO’s case. Maxim Integrated Products Inc. (NASDAQ:MXIM) is the most popular stock in this table. On the other hand Rogers Communications Inc. (NYSE:RCI) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is more popular among hedge funds. Our overall hedge fund sentiment score for TTWO is 83. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Unfortunately TTWO wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on TTWO were disappointed as the stock returned -15.6% since the end of the fourth quarter (through 4/30) 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 most of these stocks already outperformed the market since 2019.

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