“The global economic environment is very favorable for investors. Economies are generally strong, but not too strong. Employment levels are among the strongest for many decades. Interest rates are paused at very low levels, and the risk of significant increases in the medium term seems low. Financing for transactions is freely available to good borrowers, but not in major excess. Covenants are lighter than they were five years ago, but the extreme excesses seen in the past do not seem prevalent yet today. Despite this apparent ‘goldilocks’ market environment, we continue to worry about a world where politics are polarized almost everywhere, interest rates are low globally, and equity valuations are at their peak,” are the words of Brookfield Asset Management. Brookfield was right about politics as stocks experienced their second worst May since the 1960s due to escalation of trade disputes. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards TTEC Holdings, Inc. (NASDAQ:TTEC) and see how it was affected.
Is TTEC Holdings, Inc. (NASDAQ:TTEC) a sound stock to buy now? The smart money is in a pessimistic mood. The number of bullish hedge fund bets shrunk by 3 in recent months. Our calculations also showed that TTEC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the key hedge fund action surrounding TTEC Holdings, Inc. (NASDAQ:TTEC).
How have hedgies been trading TTEC Holdings, Inc. (NASDAQ:TTEC)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in TTEC a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies holds the number one position in TTEC Holdings, Inc. (NASDAQ:TTEC). Renaissance Technologies has a $19.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Mark Coe of Intrinsic Edge Capital, with a $6.4 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors and David Harding’s Winton Capital Management. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to TTEC Holdings, Inc. (NASDAQ:TTEC), around 0.73% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, setting aside 0.71 percent of its 13F equity portfolio to TTEC.
Seeing as TTEC Holdings, Inc. (NASDAQ:TTEC) has faced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of hedgies that elected to cut their full holdings heading into Q4. It’s worth mentioning that Spencer M. Waxman’s Shannon River Fund Management dropped the largest position of all the hedgies tracked by Insider Monkey, valued at close to $8.7 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund sold off about $2.9 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 3 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as TTEC Holdings, Inc. (NASDAQ:TTEC) but similarly valued. We will take a look at Chart Industries, Inc. (NASDAQ:GTLS), Sanmina Corporation (NASDAQ:SANM), Franklin Electric Co., Inc. (NASDAQ:FELE), and Hilltop Holdings Inc. (NYSE:HTH). This group of stocks’ market valuations are similar to TTEC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GTLS | 19 | 261236 | -5 |
| SANM | 20 | 211992 | 2 |
| FELE | 11 | 216330 | -3 |
| HTH | 19 | 94682 | 1 |
| Average | 17.25 | 196060 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $196 million. That figure was $41 million in TTEC’s case. Sanmina Corporation (NASDAQ:SANM) is the most popular stock in this table. On the other hand Franklin Electric Co., Inc. (NASDAQ:FELE) is the least popular one with only 11 bullish hedge fund positions. TTEC Holdings, Inc. (NASDAQ:TTEC) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately TTEC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TTEC investors were disappointed as the stock returned -4.1% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
