Were Hedge Funds Right About Talend S.A. (TLND)?

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Talend S.A. (NASDAQ:TLND).

Is Talend S.A. (NASDAQ:TLND) a buy right now? Investors who are in the know are in a bearish mood. The number of bullish hedge fund positions retreated by 5 recently. Our calculations also showed that TLND isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ryan Frick Dorsal Capital

Ryan Frick of Dorsal Capital

We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader’s corona catalyst trades. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s review the latest hedge fund action regarding Talend S.A. (NASDAQ:TLND).

How are hedge funds trading Talend S.A. (NASDAQ:TLND)?

At Q4’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from one quarter earlier. By comparison, 27 hedge funds held shares or bullish call options in TLND a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Praesidium Investment Management Company was the largest shareholder of Talend S.A. (NASDAQ:TLND), with a stake worth $68.2 million reported as of the end of September. Trailing Praesidium Investment Management Company was Southpoint Capital Advisors, which amassed a stake valued at $53.4 million. Light Street Capital, Sunriver Management, and Dorsal Capital Management 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 Sunriver Management allocated the biggest weight to Talend S.A. (NASDAQ:TLND), around 8.4% of its 13F portfolio. North Run Capital is also relatively very bullish on the stock, setting aside 8.15 percent of its 13F equity portfolio to TLND.

Seeing as Talend S.A. (NASDAQ:TLND) has experienced declining sentiment from hedge fund managers, we can see that there exists a select few fund managers that elected to cut their entire stakes last quarter. Intriguingly, Dennis Puri and Oliver Keller’s Hunt Lane Capital cut the biggest position of the 750 funds followed by Insider Monkey, worth close to $19.7 million in stock, and Seymour Sy Kaufman and Michael Stark’s Crosslink Capital was right behind this move, as the fund said goodbye to about $12.1 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 5 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Talend S.A. (NASDAQ:TLND). These stocks are H&E Equipment Services, Inc. (NASDAQ:HEES), Karyopharm Therapeutics Inc (NASDAQ:KPTI), Standard Motor Products, Inc. (NYSE:SMP), and Qudian Inc. (NYSE:QD). This group of stocks’ market caps resemble TLND’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HEES 15 44253 1
KPTI 24 520671 10
SMP 10 104835 -4
QD 14 51185 2
Average 15.75 180236 2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $180 million. That figure was $438 million in TLND’s case. Karyopharm Therapeutics Inc (NASDAQ:KPTI) is the most popular stock in this table. On the other hand Standard Motor Products, Inc. (NYSE:SMP) is the least popular one with only 10 bullish hedge fund positions. Talend S.A. (NASDAQ:TLND) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but beat the market by 12.9 percentage points. Unfortunately TLND wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on TLND were disappointed as the stock returned -35% during the same time period 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 many of these stocks already outperformed the market so far this year.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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