With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter of 2021. One of these stocks was Teradyne, Inc. (NYSE:TER).
Is Teradyne, Inc. (NYSE:TER) worth your attention right now? The best stock pickers were turning less bullish. The number of bullish hedge fund bets dropped by 2 lately. Teradyne, Inc. (NYSE:TER) was in 42 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 47. Our calculations also showed that TER isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
David E. Shaw of D.E. Shaw
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to analyze the recent hedge fund action encompassing Teradyne, Inc. (NYSE:TER).
Do Hedge Funds Think TER Is A Good Stock To Buy Now?
At third quarter’s end, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. By comparison, 42 hedge funds held shares or bullish call options in TER a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, Alkeon Capital Management was the largest shareholder of Teradyne, Inc. (NYSE:TER), with a stake worth $433.7 million reported as of the end of September. Trailing Alkeon Capital Management was Millennium Management, which amassed a stake valued at $138.9 million. Woodline Partners, D E Shaw, and ARK Investment 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 Force Hill Capital Management allocated the biggest weight to Teradyne, Inc. (NYSE:TER), around 2.94% of its 13F portfolio. Woodline Partners is also relatively very bullish on the stock, earmarking 2.15 percent of its 13F equity portfolio to TER.
Seeing as Teradyne, Inc. (NYSE:TER) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of money managers that decided to sell off their positions entirely in the third quarter. Intriguingly, Ken Griffin’s Citadel Investment Group cut the biggest position of all the hedgies tracked by Insider Monkey, valued at about $544.4 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund sold off about $244.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to Teradyne, Inc. (NYSE:TER). We will take a look at Lyft, Inc. (NASDAQ:LYFT), Take-Two Interactive Software, Inc. (NASDAQ:TTWO), NICE Ltd (NASDAQ:NICE), Companhia Paranaense de Energia (NYSE:ELP), VICI Properties Inc. (NYSE:VICI), HEICO Corporation (NYSE:HEI), and Amcor plc (NYSE:AMCR). All of these stocks’ market caps resemble TER’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LYFT | 33 | 900001 | -10 |
| TTWO | 53 | 1196708 | -2 |
| NICE | 27 | 1119470 | 5 |
| ELP | 7 | 30561 | -6 |
| VICI | 47 | 1377694 | 10 |
| HEI | 35 | 719437 | -6 |
| AMCR | 19 | 214115 | 3 |
| Average | 31.6 | 793998 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.6 hedge funds with bullish positions and the average amount invested in these stocks was $794 million. That figure was $1370 million in TER’s case. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is the most popular stock in this table. On the other hand Companhia Paranaense de Energia (NYSE:ELP) is the least popular one with only 7 bullish hedge fund positions. Teradyne, Inc. (NYSE:TER) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TER is 67.9. 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 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on TER as the stock returned 40.1% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
