Is The Trade Desk, Inc. (NASDAQ:TTD) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
The Trade Desk, Inc. (NASDAQ:TTD) shareholders have witnessed an increase in hedge fund interest of late. TTD was in 16 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 14 hedge funds in our database with TTD holdings at the end of the previous quarter. Overall hedge fund sentiment towards the stock currently sits at its all time high. This is usually a bullish sign. For example hedge fund positions in Xerox jumped to its all time high by the end of December and the stock returned more than 72% in the following 3 months or so. Another example is Xilinx. Hedge fund sentiment towards the stock was also at its all time high at the beginning of this year and the stock returned more than 46% in 2.5 months. Similarly EEFT returned more than 40% after hedge fund sentiment hit its all time high at the end of December. We observed similar performances from OKTA, Twilio, CCK, MSCI, MASI and Progressive Corporation (PGR); these stocks returned 37%, 37%, 35%, 29%, 28% and 27% respectively. Hedge fund sentiment towards IQVIA Holdings Inc. (IQV), Brookfield Asset Management (BAM), Atlassian Corporation (TEAM), RCL, MTB, VAR, RNG, FIVE, ECA, SBNY, KL and CRH also hit all time highs at the end of December, and all of these stocks returned more than 20% in the first 2.5-3 months of this year.
In today’s marketplace there are several methods market participants can use to grade stocks. A pair of the best methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the best money managers can outperform the S&P 500 by a solid margin (see the details here).
We’re going to take a look at the new hedge fund action regarding The Trade Desk, Inc. (NASDAQ:TTD).
How are hedge funds trading The Trade Desk, Inc. (NASDAQ:TTD)?
At Q4’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TTD over the last 14 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in The Trade Desk, Inc. (NASDAQ:TTD) was held by Renaissance Technologies, which reported holding $42.2 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $26.6 million position. Other investors bullish on the company included PEAK6 Capital Management, D E Shaw, and Ogborne Capital.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, created the biggest position in The Trade Desk, Inc. (NASDAQ:TTD). Citadel Investment Group had $25.1 million invested in the company at the end of the quarter. Mike Ogborne’s Ogborne Capital also initiated a $7.5 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Israel Englander’s Millennium Management, and Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital.
Let’s now review hedge fund activity in other stocks similar to The Trade Desk, Inc. (NASDAQ:TTD). These stocks are Reliance Steel & Aluminum Co. (NYSE:RS), First American Financial Corp (NYSE:FAF), Planet Fitness Inc (NYSE:PLNT), and ServiceMaster Global Holdings Inc (NYSE:SERV). This group of stocks’ market caps are closest to TTD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RS | 20 | 265758 | -7 |
| FAF | 33 | 573917 | 0 |
| PLNT | 30 | 375685 | -2 |
| SERV | 27 | 465302 | -9 |
| Average | 27.5 | 420166 | -4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.5 hedge funds with bullish positions and the average amount invested in these stocks was $420 million. That figure was $121 million in TTD’s case. First American Financial Corp (NYSE:FAF) is the most popular stock in this table. On the other hand Reliance Steel & Aluminum Co. (NYSE:RS) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks The Trade Desk, Inc. (NASDAQ:TTD) is even less popular than RS though hedge fund sentiment towards the stock is at its all time high. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Sixteen hedge funds were also right about betting on TTD as the stock returned 81.8% and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
