We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Team, Inc. (NYSE:TISI).
Team, Inc. (NYSE:TISI) investors should pay attention to an increase in hedge fund interest in recent months. TISI was in 13 hedge funds’ portfolios at the end of the third quarter of 2019. There were 12 hedge funds in our database with TISI positions at the end of the previous quarter. Our calculations also showed that TISI 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.
Mario Gabelli of GAMCO Investors
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. Let’s check out the fresh hedge fund action regarding Team, Inc. (NYSE:TISI).
How have hedgies been trading Team, Inc. (NYSE:TISI)?
Heading into the fourth quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. On the other hand, there were a total of 12 hedge funds with a bullish position in TISI 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 Team, Inc. (NYSE:TISI) was held by GAMCO Investors, which reported holding $30.4 million worth of stock at the end of September. It was followed by Ariel Investments with a $26.1 million position. Other investors bullish on the company included Royce & Associates, SG Capital Management, and Rutabaga Capital Management. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to Team, Inc. (NYSE:TISI), around 1.61% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, setting aside 1.18 percent of its 13F equity portfolio to TISI.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. SG Capital Management, managed by Ken Grossman and Glen Schneider, established the biggest position in Team, Inc. (NYSE:TISI). SG Capital Management had $6.2 million invested in the company at the end of the quarter. Richard S. Meisenberg’s ACK Asset Management also made a $2.4 million investment in the stock during the quarter. The following funds were also among the new TISI investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Paul Marshall and Ian Wace’s Marshall Wace, and Ken Griffin’s Citadel Investment Group.
Let’s now review hedge fund activity in other stocks similar to Team, Inc. (NYSE:TISI). These stocks are Antares Pharma Inc (NASDAQ:ATRS), Peapack-Gladstone Financial Corporation (NASDAQ:PGC), Ichor Holdings, Ltd. (NASDAQ:ICHR), and ADTRAN, Inc. (NASDAQ:ADTN). This group of stocks’ market caps are closest to TISI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATRS | 11 | 27672 | 1 |
| PGC | 16 | 59858 | 1 |
| ICHR | 8 | 53884 | 0 |
| ADTN | 15 | 64970 | 2 |
| Average | 12.5 | 51596 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $90 million in TISI’s case. Peapack-Gladstone Financial Corporation (NASDAQ:PGC) is the most popular stock in this table. On the other hand Ichor Holdings, Ltd. (NASDAQ:ICHR) is the least popular one with only 8 bullish hedge fund positions. Team, Inc. (NYSE:TISI) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 TISI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TISI were disappointed as the stock returned -10.4% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
