It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 5.2% over the 12-month period ending October 30, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey (as of September 2014) generated a return of 9.5% over the same time span, with 63% of these stocks outperforming the benchmark. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Tilly’s Inc (NYSE:TLYS).
Tilly’s Inc (NYSE:TLYS) was in 8 hedge funds’ portfolios at the end of the third quarter of 2015. Tilly’s Inc (NYSE:TLYS) has experienced a decrease in hedge fund interest in recent months. There were 9 hedge funds in our database with Tilly’s Inc (NYSE:TLYS) holdings at the end of the previous quarter. Following a similar route, the shares of Tilly’s Inc (NYSE:TLYS) lost 23.89% value during the quarter. In order to understand the hedge fund behavior, we will find out more about the hedge funds that held positions in the company, at the end of the last quarter.
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 Capitala Finance Corp (NASDAQ:CPTA), Kopin Corporation (NASDAQ:KOPN), and Solazyme Inc (NASDAQ:SZYM) to gather more data points.
Follow Tilly's Inc. (NYSE:TLYS)
Follow Tilly's Inc. (NYSE:TLYS)
In the financial world, there are numerous signals market participants have at their disposal to size up their holdings. Some of the most innovative signals are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can outperform the broader indices by a very impressive amount (see the details here).
Keeping this in mind, we’re going to analyze the key action regarding Tilly’s Inc (NYSE:TLYS).
How have hedgies been trading Tilly’s Inc (NYSE:TLYS)?
Heading into Q4, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 11% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies has the biggest position in Tilly’s Inc (NYSE:TLYS), worth close to $2.9 million, comprising less than 0.1% of its total 13F portfolio. Coming in second is Cliff Asness of AQR Capital Management, with a $2.7 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions contain Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, Israel Englander’s Millennium Management, and John Overdeck and David Siegel’s Two Sigma Advisors.
Since Tilly’s Inc (NYSE:TLYS) has experienced a bearish sentiment from the smart money, logic holds that there was a specific group of hedgies who sold off their positions entirely in the third quarter. Intriguingly, Brian C. Freckmann’s Lyon Street Capital cut the largest investment of all the hedgies monitored by Insider Monkey, totaling an estimated $1.5 million in stock. Joel Greenblatt’s fund, Gotham Asset Management, also dumped its stock, about $0.3 million worth of shares. These moves are important to note, as total hedge fund interest fell by 1 fund in the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Tilly’s Inc (NYSE:TLYS) but similarly valued. These stocks are Capitala Finance Corp (NASDAQ:CPTA), Kopin Corporation (NASDAQ:KOPN), Solazyme Inc (NASDAQ:SZYM), and Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN). This group of stocks’ market valuations are similar to Tilly’s Inc (NYSE:TLYS)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CPTA | 4 | 1709 | -1 |
| KOPN | 6 | 29140 | -1 |
| SZYM | 6 | 16298 | 0 |
| XIN | 4 | 5996 | 0 |
As you can see, these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $7 million in Tilly’s Inc (NYSE:TLYS)’s case. Kopin Corporation (NASDAQ:KOPN) is the most popular stock in this table. On the other hand, Capitala Finance Corp (NASDAQ:CPTA) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks, Tilly’s Inc (NYSE:TLYS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
