Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards ToughBuilt Industries, Inc. (NASDAQ:TBLT).
Is TBLT stock a buy? Investors who are in the know were becoming more confident. The number of long hedge fund positions moved up by 1 recently. ToughBuilt Industries, Inc. (NASDAQ:TBLT) was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 4. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TBLT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 3 hedge funds in our database with TBLT positions at the end of the fourth 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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Sander Gerber of Hudson Bay Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks 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. Keeping this in mind we’re going to review the recent hedge fund action surrounding ToughBuilt Industries, Inc. (NASDAQ:TBLT).
Do Hedge Funds Think TBLT Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. On the other hand, there were a total of 3 hedge funds with a bullish position in TBLT 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.
According to Insider Monkey’s hedge fund database, Renaissance Technologies, holds the number one position in ToughBuilt Industries, Inc. (NASDAQ:TBLT). Renaissance Technologies has a $2.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Ken Griffin of Citadel Investment Group, with a $0.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism include Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and Sander Gerber’s Hudson Bay Capital Management. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to ToughBuilt Industries, Inc. (NASDAQ:TBLT), around 0.0034% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, dishing out 0.0001 percent of its 13F equity portfolio to TBLT.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, established the largest position in ToughBuilt Industries, Inc. (NASDAQ:TBLT). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.1 million investment in the stock during the quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as ToughBuilt Industries, Inc. (NASDAQ:TBLT) but similarly valued. These stocks are SRAX, Inc. (NASDAQ:SRAX), CN Energy Group. Inc. (NASDAQ:CNEY), IT Tech Packaging, Inc. (NYSE:ITP), Pulmatrix, Inc. (NASDAQ:PULM), Atlantic American Corporation (NASDAQ:AAME), SIFCO Industries, Inc. (NYSE:SIF), and Jupai Holdings Limited (NYSE:JP). This group of stocks’ market values are closest to TBLT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SRAX | 7 | 6454 | 5 |
| CNEY | 1 | 116 | 1 |
| ITP | 2 | 311 | 0 |
| PULM | 4 | 3389 | 0 |
| AAME | 2 | 340 | 1 |
| SIF | 4 | 7078 | 1 |
| JP | 2 | 713 | 1 |
| Average | 3.1 | 2629 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.1 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $3 million in TBLT’s case. SRAX, Inc. (NASDAQ:SRAX) is the most popular stock in this table. On the other hand CN Energy Group. Inc. (NASDAQ:CNEY) is the least popular one with only 1 bullish hedge fund positions. ToughBuilt Industries, Inc. (NASDAQ:TBLT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TBLT is 61. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately TBLT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TBLT were disappointed as the stock returned -18.7% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
