You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund managers like Jeff Ubben, George Soros and Seth Klarman hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Team, Inc. (NYSE:TISI) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 12 hedge funds’ portfolios at the end of December. 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 BioSpecifics Technologies Corp. (NASDAQ:BSTC), PennantPark Investment Corp. (NASDAQ:PNNT), and United Community Financial Corp (NASDAQ:UCFC) to gather more data points.
Why do we pay any attention at all to hedge fund sentiment? 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 market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to view the recent hedge fund action encompassing Team, Inc. (NYSE:TISI).
What have hedge funds been doing with Team, Inc. (NYSE:TISI)?
At the end of the fourth quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards TISI over the last 14 quarters. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
The largest stake in Team, Inc. (NYSE:TISI) was held by GAMCO Investors, which reported holding $23.1 million worth of stock at the end of December. It was followed by Ariel Investments with a $21.6 million position. Other investors bullish on the company included Royce & Associates, Winton Capital Management, and Rutabaga Capital Management.
Due to the fact that Team, Inc. (NYSE:TISI) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of money managers that slashed their full holdings last quarter. At the top of the heap, Paul Tudor Jones’s Tudor Investment Corp dumped the largest stake of the 700 funds watched by Insider Monkey, comprising about $0.4 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dumped its stock, about $0.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Team, Inc. (NYSE:TISI). We will take a look at BioSpecifics Technologies Corp. (NASDAQ:BSTC), PennantPark Investment Corp. (NASDAQ:PNNT), United Community Financial Corp (NASDAQ:UCFC), and Hawkins, Inc. (NASDAQ:HWKN). This group of stocks’ market values are similar to TISI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BSTC | 10 | 43235 | 0 |
| PNNT | 9 | 13370 | 2 |
| UCFC | 8 | 30776 | 0 |
| HWKN | 9 | 8181 | 0 |
| Average | 9 | 23891 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $79 million in TISI’s case. BioSpecifics Technologies Corp. (NASDAQ:BSTC) is the most popular stock in this table. On the other hand United Community Financial Corp (NASDAQ:UCFC) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Team, Inc. (NYSE:TISI) 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 TISI as the stock returned 25.9% and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
