Is Target (TGT) Stock A Buy or Sell?

With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was Target Corporation (NYSE:TGT).

Is TGT stock a buy or sell? Target Corporation (NYSE:TGT) investors should be aware of an increase in enthusiasm from smart money lately. Target Corporation (NYSE:TGT) was in 78 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 57. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TGT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Clint Carlson of Carlson Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 best cheap stocks to buy now to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). With all of this in mind let’s analyze the recent hedge fund action encompassing Target Corporation (NYSE:TGT).

Do Hedge Funds Think TGT Is A Good Stock To Buy Now?

At Q4’s end, a total of 78 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 37% from one quarter earlier. On the other hand, there were a total of 53 hedge funds with a bullish position in TGT 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.

The largest stake in Target Corporation (NYSE:TGT) was held by Renaissance Technologies, which reported holding $943.7 million worth of stock at the end of December. It was followed by D1 Capital Partners with a $634.7 million position. Other investors bullish on the company included AQR Capital Management, Two Sigma Advisors, and D E Shaw. In terms of the portfolio weights assigned to each position Rip Road Capital allocated the biggest weight to Target Corporation (NYSE:TGT), around 6.14% of its 13F portfolio. Stormborn Capital Management is also relatively very bullish on the stock, setting aside 4.86 percent of its 13F equity portfolio to TGT.

As one would reasonably expect, key money managers were leading the bulls’ herd. Palestra Capital Management, managed by Andrew Immerman and Jeremy Schiffman, created the most outsized position in Target Corporation (NYSE:TGT). Palestra Capital Management had $126.4 million invested in the company at the end of the quarter. Steven Boyd’s Armistice Capital also made a $31.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Benjamin A. Smith’s Laurion Capital Management, Spencer M. Waxman’s Shannon River Fund Management, and Clint Carlson’s Carlson Capital.

Let’s check out hedge fund activity in other stocks similar to Target Corporation (NYSE:TGT). These stocks are Fidelity National Information Services Inc. (NYSE:FIS), 0, British American Tobacco plc (NYSE:BTI), Vale SA (NYSE:VALE), Deere & Company (NYSE:DE), Micron Technology, Inc. (NASDAQ:MU), and Mondelez International Inc (NASDAQ:MDLZ). This group of stocks’ market values resemble TGT’s market value.

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As you can see these stocks had an average of 57.9 hedge funds with bullish positions and the average amount invested in these stocks was $3873 million. That figure was $4065 million in TGT’s case. Micron Technology, Inc. (NASDAQ:MU) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 10 bullish hedge fund positions. Target Corporation (NYSE:TGT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TGT is 77.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7% in 2021 through March 12th and beat the market again by 1.6 percentage points. Unfortunately TGT wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on TGT were disappointed as the stock returned 2.3% since the end of December (through 3/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.