At Insider Monkey we follow nearly 750 of the best-performing investors and even though many of them lost money in the last couple of months of 2018 (some actually delivered very strong returns), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.
Is The Toro Company (NYSE:TTC) a buy here? Investors who are in the know are taking a bearish view. The number of long hedge fund bets were cut by 5 recently. Our calculations also showed that ttc isn’t among the 30 most popular stocks among hedge funds. TTC was in 16 hedge funds’ portfolios at the end of the first quarter of 2019. There were 21 hedge funds in our database with TTC positions at the end of the previous quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s view the fresh hedge fund action regarding The Toro Company (NYSE:TTC).
How have hedgies been trading The Toro Company (NYSE:TTC)?
At Q1’s end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -24% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TTC over the last 15 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in The Toro Company (NYSE:TTC) was held by Select Equity Group, which reported holding $246 million worth of stock at the end of March. It was followed by Impax Asset Management with a $103.9 million position. Other investors bullish on the company included Fisher Asset Management, GLG Partners, and Renaissance Technologies.
Seeing as The Toro Company (NYSE:TTC) has experienced a decline in interest from hedge fund managers, we can see that there is a sect of money managers that elected to cut their entire stakes last quarter. Interestingly, Israel Englander’s Millennium Management cut the biggest position of the 700 funds tracked by Insider Monkey, worth an estimated $6 million in stock. Richard Chilton’s fund, Chilton Investment Company, also dropped its stock, about $2 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 5 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to The Toro Company (NYSE:TTC). These stocks are TIM Participacoes SA (NYSE:TSU), Voya Financial Inc (NYSE:VOYA), AMERCO (NASDAQ:UHAL), and Aramark (NYSE:ARMK). This group of stocks’ market values are similar to TTC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TSU | 16 | 341506 | 2 |
| VOYA | 45 | 1331987 | 7 |
| UHAL | 12 | 390787 | 5 |
| ARMK | 38 | 853818 | -1 |
| Average | 27.75 | 729525 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $730 million. That figure was $577 million in TTC’s case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table. On the other hand AMERCO (NASDAQ:UHAL) is the least popular one with only 12 bullish hedge fund positions. The Toro Company (NYSE:TTC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately TTC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TTC investors were disappointed as the stock returned -0.6% during the same time 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 so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
