It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Toronto-Dominion Bank (NYSE:TD) .
Hedge fund interest in Toronto-Dominion Bank (NYSE:TD) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as QUALCOMM, Inc. (NASDAQ:QCOM), Diageo plc (ADR) (NYSE:DEO), and Reynolds American, Inc. (NYSE:RAI) to gather more data points.
Follow Toronto Dominion Bank Ont (NYSE:TD)
Follow Toronto Dominion Bank Ont (NYSE:TD)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, we’re going to check out the fresh action surrounding Toronto-Dominion Bank (NYSE:TD).
How have hedgies been trading Toronto-Dominion Bank (NYSE:TD)?
At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2016. By comparison, 14 hedge funds held shares or bullish call options in TD heading into this year. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Tetrem Capital Management, led by Daniel Bubis, holds the largest position in Toronto-Dominion Bank (NYSE:TD). Tetrem Capital Management has a $157.9 million position in the stock, comprising 5.9% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, led by Jim Simons, which holds a $77.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism include Cliff Asness’ AQR Capital Management, Robert B. Gillam’s McKinley Capital Management and Israel Englander’s Millennium Management. We should note that none of these elite funds are among our list of the 100 best performing elite funds which is based on the performance of their 13F long positions in non-microcap stocks.
Because Toronto-Dominion Bank (NYSE:TD) has weathered staid sentiment from hedge fund managers, it’s easy to see that there is a sect of hedge funds who sold off their full holdings last quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group cashed in the largest investment of all the investors watched by Insider Monkey, comprising an estimated $3.3 million in call options. Brian Taylor’s fund, Pine River Capital Management, also said goodbye to its stock, about $1.3 million worth.
Let’s go over hedge fund activity in other stocks similar to Toronto-Dominion Bank (NYSE:TD). These stocks are QUALCOMM, Inc. (NASDAQ:QCOM), Diageo plc (ADR) (NYSE:DEO), Reynolds American, Inc. (NYSE:RAI), and Celgene Corporation (NASDAQ:CELG). All of these stocks’ market caps are similar to TD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QCOM | 69 | 4640645 | 21 |
| DEO | 16 | 1095658 | -2 |
| RAI | 39 | 1069207 | -1 |
| CELG | 67 | 2567429 | -1 |
As you can see these stocks had an average of 47.75 hedge funds with bullish positions and the average amount invested in these stocks was $2343 million. That figure was $428 million in TD’s case. QUALCOMM, Inc. (NASDAQ:QCOM) is the most popular stock in this table. On the other hand Diageo plc (ADR) (NYSE:DEO) is the least popular one with only 16 bullish hedge fund positions. Toronto-Dominion Bank (NYSE:TD) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard QCOM might be a better candidate to consider taking a long position in.
