Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Twin Disc, Incorporated (NASDAQ:TWIN).
Twin Disc, Incorporated (NASDAQ:TWIN) has seen a decrease in activity from the world’s largest hedge funds lately. Twin Disc, Incorporated (NASDAQ:TWIN) was in 4 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 10. Our calculations also showed that TWIN 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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. With all of this in mind we’re going to take a peek at the recent hedge fund action surrounding Twin Disc, Incorporated (NASDAQ:TWIN).
What does smart money think about Twin Disc, Incorporated (NASDAQ:TWIN)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -50% from the second quarter of 2020. On the other hand, there were a total of 5 hedge funds with a bullish position in TWIN 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.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mario Gabelli’s GAMCO Investors has the biggest position in Twin Disc, Incorporated (NASDAQ:TWIN), worth close to $8.1 million, comprising 0.1% of its total 13F portfolio. The second largest stake is held by Juniper Investment Company, managed by Alexis Michas and John Bartholdson, which holds a $5.2 million position; the fund has 5.5% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions comprise Renaissance Technologies, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position Juniper Investment Company allocated the biggest weight to Twin Disc, Incorporated (NASDAQ:TWIN), around 5.5% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, designating 0.09 percent of its 13F equity portfolio to TWIN.
Judging by the fact that Twin Disc, Incorporated (NASDAQ:TWIN) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there exists a select few hedgies that slashed their full holdings last quarter. It’s worth mentioning that Donald Sussman’s Paloma Partners dumped the biggest investment of the 750 funds monitored by Insider Monkey, valued at about $0.1 million in stock. Greg Eisner’s fund, Engineers Gate Manager, also said goodbye to its stock, about $0.1 million worth. These moves are important to note, as total hedge fund interest fell by 4 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to Twin Disc, Incorporated (NASDAQ:TWIN). These stocks are First National Corporation (NASDAQ:FXNC), Inspired Entertainment, Inc. (NASDAQ:INSE), TRACON Pharmaceuticals Inc (NASDAQ:TCON), Randolph Bancorp, Inc. (NASDAQ:RNDB), Hunt Companies Finance Trust, Inc. (NYSE:HCFT), Emclaire Financial Corp (NASDAQ:EMCF), and Satsuma Pharmaceuticals, Inc. (NASDAQ:STSA). This group of stocks’ market values match TWIN’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.1 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $15 million in TWIN’s case. Satsuma Pharmaceuticals, Inc. (NASDAQ:STSA) is the most popular stock in this table. On the other hand First National Corporation (NASDAQ:FXNC) is the least popular one with only 2 bullish hedge fund positions. Twin Disc, Incorporated (NASDAQ:TWIN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TWIN is 29.7. 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 gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on TWIN as the stock returned 24.7% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.