Does Twitter Inc (NYSE:TWTR) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.
Is Twitter Inc (NYSE:TWTR) a good investment now? The smart money is becoming hopeful. The number of long hedge fund positions advanced by 2 in recent months. Our calculations also showed that TWTR isn’t among the 30 most popular stocks among hedge funds.
According to most investors, hedge funds are perceived as worthless, old investment vehicles of yesteryear. While there are over 8,000 funds trading at present, We choose to focus on the upper echelon of this group, around 700 funds. It is estimated that this group of investors command the majority of the hedge fund industry’s total capital, and by monitoring their matchless stock picks, Insider Monkey has unearthed a number of investment strategies that have historically outperformed the market. Insider Monkey’s flagship hedge fund strategy outrun the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
Let’s take a gander at the key hedge fund action encompassing Twitter Inc (NYSE:TWTR).
What does the smart money think about Twitter Inc (NYSE:TWTR)?
At Q3’s end, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards TWTR over the last 13 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Philippe Laffont’s Coatue Management has the biggest position in Twitter Inc (NYSE:TWTR), worth close to $241.7 million, accounting for 2.5% of its total 13F portfolio. Coming in second is Tiger Global Management LLC, managed by Chase Coleman, which holds a $195.3 million position; 0.9% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions include Ken Griffin’s Citadel Investment Group, and Brett Barakett’s Tremblant Capital.
Consequently, key money managers have jumped into Twitter Inc (NYSE:TWTR) headfirst. Point72 Asset Management, managed by Steve Cohen, assembled the largest position in Twitter Inc (NYSE:TWTR). Point72 Asset Management had $11.9 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $6.5 million position during the quarter. The following funds were also among the new TWTR investors: Ilan Assouline’s Circle Road Advisors, Benjamin A. Smith’s Laurion Capital Management, and Benjamin A. Smith’s Laurion Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Twitter Inc (NYSE:TWTR) but similarly valued. These stocks are Lululemon Athletica inc. (NASDAQ:LULU), Hess Corporation (NYSE:HES), The Hershey Company (NYSE:HSY), and IHS Markit Ltd. (NASDAQ:INFO). This group of stocks’ market values are similar to TWTR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LULU | 45 | 1651249 | 4 |
| HES | 37 | 2364508 | 5 |
| HSY | 29 | 448888 | 4 |
| INFO | 31 | 1334993 | 4 |
| Average | 35.5 | 1450 | 4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.5 hedge funds with bullish positions and the average amount invested in these stocks was $1.45 billion. That figure was $1.07 billion in TWTR’s case. Lululemon Athletica inc. (NASDAQ:LULU) is the most popular stock in this table. On the other hand The Hershey Company (NYSE:HSY) is the least popular one with only 29 bullish hedge fund positions. Twitter Inc (NYSE:TWTR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LULU might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
