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Were Hedge Funds Right About The TJX Companies, Inc. (TJX)?

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 latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 835 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2019. In this article we are going to take a look at smart money sentiment towards The TJX Companies, Inc. (NYSE:TJX).

The TJX Companies, Inc. (NYSE:TJX) investors should be aware of an increase in enthusiasm from smart money recently. TJX was in 57 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 53 hedge funds in our database with TJX holdings at the end of the previous quarter. Our calculations also showed that TJX 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).

Ric Dillon Diamond Hill Capital

Ric Dillon of Diamond Hill Capital

We leave no stone unturned when looking for the next great investment idea. For example, this trader is claiming triple digit returns, so we check out his latest trade recommendations. Federal Reserve and Central Banks all around world are printing money like there is no tomorrow, so we check out this this precious metals expert’s stock pick. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). 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. With all of this in mind let’s check out the new hedge fund action encompassing The TJX Companies, Inc. (NYSE:TJX).

How are hedge funds trading The TJX Companies, Inc. (NYSE:TJX)?

At Q4’s end, a total of 57 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. On the other hand, there were a total of 58 hedge funds with a bullish position in TJX a year ago. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

More specifically, Diamond Hill Capital was the largest shareholder of The TJX Companies, Inc. (NYSE:TJX), with a stake worth $411.2 million reported as of the end of September. Trailing Diamond Hill Capital was Arrowstreet Capital, which amassed a stake valued at $289.1 million. AQR Capital Management, D E Shaw, and Millennium 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 MIK Capital allocated the biggest weight to The TJX Companies, Inc. (NYSE:TJX), around 6.86% of its 13F portfolio. Rip Road Capital is also relatively very bullish on the stock, designating 6.7 percent of its 13F equity portfolio to TJX.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Adage Capital Management, managed by Phill Gross and Robert Atchinson, created the most outsized position in The TJX Companies, Inc. (NYSE:TJX). Adage Capital Management had $84.8 million invested in the company at the end of the quarter. Kamyar Khajavi’s MIK Capital also initiated a $19.7 million position during the quarter. The other funds with new positions in the stock are Steven Boyd’s Armistice Capital, Dennis Goldstein’s Rip Road Capital, and Robert Pitts’s Steadfast Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as The TJX Companies, Inc. (NYSE:TJX) but similarly valued. These stocks are Ambev SA (NYSE:ABEV), CME Group Inc (NASDAQ:CME), Banco Bradesco SA (NYSE:BBD), and ConocoPhillips (NYSE:COP). This group of stocks’ market values match TJX’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ABEV 14 548416 -5
CME 54 2402338 2
BBD 18 661816 1
COP 62 2437765 -8
Average 37 1512584 -2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was $1513 million. That figure was $2183 million in TJX’s case. ConocoPhillips (NYSE:COP) is the most popular stock in this table. On the other hand Ambev SA (NYSE:ABEV) is the least popular one with only 14 bullish hedge fund positions. The TJX Companies, Inc. (NYSE:TJX) 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 lost 1.0% in 2020 through April 20th but beat the market by 11 percentage points. Unfortunately TJX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on TJX were disappointed as the stock returned -21.4% 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.

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