Hedge Funds Are Bullish On Tetra Tech, Inc. (TTEK)

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Tetra Tech, Inc. (NASDAQ:TTEK).

Tetra Tech, Inc. (NASDAQ:TTEK) shareholders have witnessed an increase in hedge fund sentiment of late. Tetra Tech, Inc. (NASDAQ:TTEK) was in 25 hedge funds’ portfolios at the end of June. The all time high for this statistic is 29. Our calculations also showed that TTEK isn’t among the 30 most popular stocks among hedge funds (click for Q2 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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Bruce Kovner of Caxton Associates LP

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to check out the new hedge fund action encompassing Tetra Tech, Inc. (NASDAQ:TTEK).

Do Hedge Funds Think TTEK Is A Good Stock To Buy Now?

At the end of June, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in TTEK a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Value Holdings LP held the most valuable stake in Tetra Tech, Inc. (NASDAQ:TTEK), which was worth $31.5 million at the end of the second quarter. On the second spot was D E Shaw which amassed $11.9 million worth of shares. Intrinsic Edge Capital, Citadel Investment Group, 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 Value Holdings LP allocated the biggest weight to Tetra Tech, Inc. (NASDAQ:TTEK), around 7.1% of its 13F portfolio. Running Oak Capital is also relatively very bullish on the stock, dishing out 3.19 percent of its 13F equity portfolio to TTEK.

Now, key hedge funds have been driving this bullishness. Intrinsic Edge Capital, managed by Mark Coe, created the most valuable position in Tetra Tech, Inc. (NASDAQ:TTEK). Intrinsic Edge Capital had $10.6 million invested in the company at the end of the quarter. Robert Charles Gibbins’s Autonomy Capital also initiated a $2.8 million position during the quarter. The following funds were also among the new TTEK investors: Ken Grossman and Glen Schneider’s SG Capital Management, Renaissance Technologies, and Bruce Kovner’s Caxton Associates LP.

Let’s also examine hedge fund activity in other stocks similar to Tetra Tech, Inc. (NASDAQ:TTEK). These stocks are Choice Hotels International, Inc. (NYSE:CHH), SLM Corp (NASDAQ:SLM), Redfin Corporation (NASDAQ:RDFN), BRP Inc. (NASDAQ:DOOO), Eastgroup Properties Inc (NYSE:EGP), Stericycle Inc (NASDAQ:SRCL), and Omnicell, Inc. (NASDAQ:OMCL). This group of stocks’ market valuations match TTEK’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $425 million. That figure was $135 million in TTEK’s case. SLM Corp (NASDAQ:SLM) is the most popular stock in this table. On the other hand Eastgroup Properties Inc (NYSE:EGP) is the least popular one with only 11 bullish hedge fund positions. Tetra Tech, Inc. (NASDAQ:TTEK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TTEK is 76.6. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on TTEK as the stock returned 36.4% since the end of Q2 (through 10/22) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Suggested Articles:

• 10 Cheap Oil Stocks Under $10
• 10 Best Safe Blue Chip Dividend Stocks
• 10 Best ADR Stocks to Buy in 2021

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