Is Take-Two Interactive Software, Inc. (TTWO) a Good Buy?

Between June 25 and October 30th the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Take-Two Interactive Software, Inc. (NASDAQ:TTWO) and see how the stock is affected by the recent hedge fund activity.

Is Take-Two Interactive Software, Inc. (NASDAQ:TTWO) a first-rate investment now? Money managers are in a bearish mood. The number of bullish hedge fund bets dropped by 5 lately. TTWO was in 35 hedge funds’ portfolios at the end of the third quarter of 2015. There were 40 hedge funds in our database with TTWO holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Cable One Inc (NYSE:CABO), Fortress Investment Group LLC (NYSE:FIG), and AMC Entertainment Holdings Inc (NYSE:AMC) to gather more data points.

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With all of this in mind, let’s check out the fresh action encompassing Take-Two Interactive Software, Inc. (NASDAQ:TTWO).

Hedge fund activity in Take-Two Interactive Software, Inc. (NASDAQ:TTWO)

Heading into Q4, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, David Einhorn’s Greenlight Capital has the largest position in Take-Two Interactive Software, Inc. (NASDAQ:TTWO), worth close to $119.5 million, corresponding to 2% of its total 13F portfolio. The second most bullish fund manager is Ivory Capital (Investment Mgmt), managed by Curtis Macnguyen, which holds an $116.2 million position; 3.1% of its 13F portfolio is allocated to the company. Other peers that hold long positions consist of Ricky Sandler’s Eminence Capital, Jim Simons’ Renaissance Technologies and Panayotis Takis Sparaggis’ Alkeon Capital Management.

Due to the fact that Take-Two Interactive Software, Inc. (NASDAQ:TTWO) has experienced a declination in interest from hedge fund managers, it’s easy to see that there is a sect of hedgies that slashed their entire stakes by the end of the third quarter. Intriguingly, D E Shaw cut the largest stake of all the hedgies tracked by Insider Monkey, comprising close to $16.7 million in stock. Millennium Management Subsidiary’s fund, Blue Arrow Capital Management, also said goodbye to its stock, about $10 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 5 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Take-Two Interactive Software, Inc. (NASDAQ:TTWO) but similarly valued. These stocks are Cable One Inc (NYSE:CABO), Fortress Investment Group LLC (NYSE:FIG), AMC Entertainment Holdings Inc (NYSE:AMC), and MB Financial, Inc. (NASDAQ:MBFI). This group of stocks’ market caps resemble TTWO’s market cap.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $905 million in TTWO’s case. Cable One Inc (NYSE:CABO) is the most popular stock in this table. On the other hand MB Financial, Inc. (NASDAQ:MBFI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.