Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we pay special attention to the hedge fund activity in the small-cap space.
Interface, Inc. (NASDAQ:TILE) investors should be aware of a decrease in enthusiasm from smart money lately. TILE was in 16 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 17 hedge funds in our database with TILE positions at the end of the previous quarter. Our calculations also showed that tile isn’t among the 30 most popular stocks among hedge funds.
According to most traders, hedge funds are seen as underperforming, old financial tools of the past. While there are more than 8000 funds trading at the moment, Our researchers look at the moguls of this club, approximately 750 funds. It is estimated that this group of investors shepherd the majority of the smart money’s total capital, and by paying attention to their unrivaled equity investments, Insider Monkey has deciphered many investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by nearly 5 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
We’re going to go over the recent hedge fund action encompassing Interface, Inc. (NASDAQ:TILE).
What have hedge funds been doing with Interface, Inc. (NASDAQ:TILE)?
Heading into the first quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position in TILE a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Interface, Inc. (NASDAQ:TILE) was held by Ariel Investments, which reported holding $16 million worth of stock at the end of December. It was followed by D E Shaw with a $8.1 million position. Other investors bullish on the company included Royce & Associates, Balyasny Asset Management, and AQR Capital Management.
Because Interface, Inc. (NASDAQ:TILE) has faced a decline in interest from hedge fund managers, it’s easy to see that there is a sect of money managers that decided to sell off their entire stakes heading into Q3. Interestingly, Noam Gottesman’s GLG Partners cut the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $10.2 million in stock, and Brandon Haley’s Holocene Advisors was right behind this move, as the fund cut about $0.8 million worth. These transactions are interesting, as total hedge fund interest was cut by 1 funds heading into Q3.
Let’s go over hedge fund activity in other stocks similar to Interface, Inc. (NASDAQ:TILE). We will take a look at TPI Composites, Inc. (NASDAQ:TPIC), Laredo Petroleum Inc (NYSE:LPI), The Gorman-Rupp Company (NYSE:GRC), and The Andersons, Inc. (NASDAQ:ANDE). This group of stocks’ market valuations resemble TILE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TPIC | 13 | 89898 | -4 |
| LPI | 14 | 195611 | -6 |
| GRC | 7 | 34299 | -2 |
| ANDE | 6 | 47316 | -2 |
| Average | 10 | 91781 | -3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $92 million. That figure was $59 million in TILE’s case. Laredo Petroleum Inc (NYSE:LPI) is the most popular stock in this table. On the other hand The Andersons, Inc. (NASDAQ:ANDE) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Interface, Inc. (NASDAQ:TILE) is more popular among hedge funds. 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. Hedge funds were also right about betting on TILE, though not to the same extent, as the stock returned 17.4% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
