Is Teradata Corporation (TDC) A Good Stock To Buy?

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 investors like Carl Icahn and George Soros 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.

Teradata Corporation (NYSE:TDC) investors should pay attention to a decrease in support from the world’s most elite money managers of late. TDC was in 23 hedge funds’ portfolios at the end of September. There were 26 hedge funds in our database with TDC positions 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 EPAM Systems Inc (NYSE:EPAM), CAE, Inc. (USA) (NYSE:CAE), and Black Hills Corp (NYSE:BKH) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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With all of this in mind, let’s view the new action surrounding Teradata Corporation (NYSE:TDC).

Hedge fund activity in Teradata Corporation (NYSE:TDC)

At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -12% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Jim Simons’s Renaissance Technologies has the number one position in Teradata Corporation (NYSE:TDC), worth close to $122.2 million, accounting for 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is International Value Advisers which holds a $94.1 million position; 2.8% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions encompass Cliff Asness’s AQR Capital Management, Joel Greenblatt’s Gotham Asset Management and Israel Englander’s Millennium Management.

Since Teradata Corporation (NYSE:TDC) has experienced falling interest from the aggregate hedge fund industry, logic holds that there exists a select few money managers that decided to sell off their positions entirely in the third quarter. Interestingly, First Eagle Investment Management dropped the biggest stake of the 700 funds followed by Insider Monkey, comprising close to $435.1 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund dumped about $5.1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Teradata Corporation (NYSE:TDC) but similarly valued. We will take a look at EPAM Systems Inc (NYSE:EPAM), CAE, Inc. (USA) (NYSE:CAE), Black Hills Corp (NYSE:BKH), and First Industrial Realty Trust, Inc. (NYSE:FR). This group of stocks’ market values match TDC’s market value.

As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $179 million. That figure was $378 million in TDC’s case. EPAM Systems Inc (NYSE:EPAM) is the most popular stock in this table. On the other hand First Industrial Realty Trust, Inc. (NYSE:FR) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Teradata Corporation (NYSE:TDC) 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.