Hedge Funds Are Buying Teradata Corporation (TDC)

Is Teradata Corporation (NYSE:TDC) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Teradata Corporation (NYSE:TDC) shareholders have witnessed an increase in support from the world’s most elite money managers in recent months. Teradata Corporation (NYSE:TDC) was in 28 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 33. There were 26 hedge funds in our database with TDC holdings at the end of June. Our calculations also showed that TDC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. With all of this in mind we’re going to take a glance at the fresh hedge fund action encompassing Teradata Corporation (NYSE:TDC).

Richard Driehaus of Driehaus Capital

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

Heading into the fourth quarter of 2021, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. On the other hand, there were a total of 33 hedge funds with a bullish position in TDC a year ago. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Lynrock Lake, managed by Cynthia Paul, holds the most valuable position in Teradata Corporation (NYSE:TDC). Lynrock Lake has a $261.9 million position in the stock, comprising 16.2% of its 13F portfolio. On Lynrock Lake’s heels is Empyrean Capital Partners, led by Michael A. Price and Amos Meron, holding a $70.7 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Other peers that hold long positions include John Overdeck and David Siegel’s Two Sigma Advisors, Renaissance Technologies and Richard Driehaus’s Driehaus Capital. In terms of the portfolio weights assigned to each position Lynrock Lake allocated the biggest weight to Teradata Corporation (NYSE:TDC), around 16.16% of its 13F portfolio. Andar Capital is also relatively very bullish on the stock, designating 11.44 percent of its 13F equity portfolio to TDC.

As aggregate interest increased, key money managers were breaking ground themselves. Royce & Associates, managed by Chuck Royce, assembled the most outsized position in Teradata Corporation (NYSE:TDC). Royce & Associates had $15.5 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $9.7 million position during the quarter. The following funds were also among the new TDC investors: Ryan Caldwell’s Chiron Investment Management, Peter Algert’s Algert Global, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Teradata Corporation (NYSE:TDC) but similarly valued. We will take a look at Stericycle Inc (NASDAQ:SRCL), TriNet Group Inc (NYSE:TNET), Performance Food Group Company (NYSE:PFGC), Affiliated Managers Group, Inc. (NYSE:AMG), Duolingo Inc. (NASDAQ:DUOL), ANGI Inc (NASDAQ:ANGI), and Emcor Group Inc (NYSE:EME). This group of stocks’ market caps resemble TDC’s market cap.

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As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $437 million. That figure was $584 million in TDC’s case. Performance Food Group Company (NYSE:PFGC) is the most popular stock in this table. On the other hand Duolingo Inc. (NASDAQ:DUOL) is the least popular one with only 12 bullish hedge fund positions. Teradata Corporation (NYSE:TDC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TDC is 65.8. 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. 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 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately TDC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TDC were disappointed as the stock returned -25.3% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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