We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (read our latest 10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 835 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2019. 0
Tiffany & Co. (NYSE:TIF) was in 62 hedge funds’ portfolios at the end of December. TIF investors should be aware of an increase in enthusiasm from smart money lately. There were 32 hedge funds in our database with TIF holdings at the end of the previous quarter. Our calculations also showed that TIF isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
To most investors, hedge funds are perceived as unimportant, old investment vehicles of years past. While there are over 8000 funds in operation at the moment, Our experts choose to focus on the bigwigs of this group, around 850 funds. These money managers control bulk of all hedge funds’ total asset base, and by tailing their matchless investments, Insider Monkey has unearthed several investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Clint Carlson of Carlson Capital
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a peek at the recent hedge fund action regarding Tiffany & Co. (NYSE:TIF).
Hedge fund activity in Tiffany & Co. (NYSE:TIF)
Heading into the first quarter of 2020, a total of 62 of the hedge funds tracked by Insider Monkey were long this stock, a change of 94% from the third quarter of 2019. By comparison, 30 hedge funds held shares or bullish call options in TIF a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Carlson Capital was the largest shareholder of Tiffany & Co. (NYSE:TIF), with a stake worth $224.6 million reported as of the end of September. Trailing Carlson Capital was Pentwater Capital Management, which amassed a stake valued at $192.8 million. Magnetar Capital, Alpine Associates, and Balyasny Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Twin Capital Management allocated the biggest weight to Tiffany & Co. (NYSE:TIF), around 22.21% of its 13F portfolio. Sand Grove Capital Partners is also relatively very bullish on the stock, earmarking 14.88 percent of its 13F equity portfolio to TIF.
Now, key hedge funds have been driving this bullishness. Carlson Capital, managed by Clint Carlson, initiated the most outsized position in Tiffany & Co. (NYSE:TIF). Carlson Capital had $224.6 million invested in the company at the end of the quarter. Matthew Halbower’s Pentwater Capital Management also made a $192.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Alec Litowitz and Ross Laser’s Magnetar Capital, Robert Emil Zoellner’s Alpine Associates, and James Dinan’s York Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Tiffany & Co. (NYSE:TIF) but similarly valued. We will take a look at Discovery Communications Inc. (NASDAQ:DISCK), Grifols SA (NASDAQ:GRFS), NortonLifeLock Inc. (NASDAQ:NLOK), and Roku, Inc. (NASDAQ:ROKU). All of these stocks’ market caps match TIF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DISCK | 33 | 948913 | 0 |
| GRFS | 21 | 767478 | -1 |
| NLOK | 46 | 1623946 | 5 |
| ROKU | 34 | 231771 | -5 |
| Average | 33.5 | 893027 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.5 hedge funds with bullish positions and the average amount invested in these stocks was $893 million. That figure was $2224 million in TIF’s case. NortonLifeLock Inc. (NASDAQ:NLOK) is the most popular stock in this table. On the other hand Grifols SA (NASDAQ:GRFS) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Tiffany & Co. (NYSE:TIF) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but still managed to beat the market by 3.2 percentage points. Hedge funds were also right about betting on TIF as the stock returned -13.4% so far in Q1 (through March 16th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
