Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Talend S.A. (NASDAQ:TLND) investors should pay attention to an increase in enthusiasm from smart money recently. Our calculations also showed that tlnd isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let’s check out the latest hedge fund action encompassing Talend S.A. (NASDAQ:TLND).
How have hedgies been trading Talend S.A. (NASDAQ:TLND)?
At Q1’s end, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TLND over the last 15 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Kevin Oram and Peter Uddo’s Praesidium Investment Management Company has the largest position in Talend S.A. (NASDAQ:TLND), worth close to $90.4 million, comprising 6% of its total 13F portfolio. On Praesidium Investment Management Company’s heels is Dorsal Capital Management, managed by Ryan Frick and Oliver Evans, which holds a $60.7 million position; the fund has 4% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism include John Smith Clark’s Southpoint Capital Advisors, Will Cook’s Sunriver Management and Greg Poole’s Echo Street Capital Management.
As aggregate interest increased, key hedge funds have jumped into Talend S.A. (NASDAQ:TLND) headfirst. Southpoint Capital Advisors, managed by John Smith Clark, initiated the most outsized position in Talend S.A. (NASDAQ:TLND). Southpoint Capital Advisors had $43.2 million invested in the company at the end of the quarter. Will Cook’s Sunriver Management also initiated a $28 million position during the quarter. The other funds with new positions in the stock are Greg Poole’s Echo Street Capital Management, Derek C. Schrier’s Indaba Capital Management, and Ravee Mehta’s Nishkama Capital.
Let’s check out hedge fund activity in other stocks similar to Talend S.A. (NASDAQ:TLND). These stocks are NOW Inc (NYSE:DNOW), Medifast, Inc. (NYSE:MED), SPX Corporation (NYSE:SPXC), and BrightView Holdings, Inc. (NYSE:BV). This group of stocks’ market valuations match TLND’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DNOW | 14 | 99078 | 0 |
| MED | 28 | 310634 | 6 |
| SPXC | 19 | 111377 | 4 |
| BV | 9 | 225251 | -1 |
| Average | 17.5 | 186585 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $187 million. That figure was $445 million in TLND’s case. Medifast, Inc. (NYSE:MED) is the most popular stock in this table. On the other hand BrightView Holdings, Inc. (NYSE:BV) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Talend S.A. (NASDAQ:TLND) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately TLND wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TLND were disappointed as the stock returned -4.5% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
