Is TETRA Technologies, Inc. (TTI) A Good Stock To Buy?

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 over the past few 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 hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards TETRA Technologies, Inc. (NYSE:TTI).

Is TETRA Technologies, Inc. (NYSE:TTI) ready to rally soon? The smart money is taking a bullish view. The number of long hedge fund bets moved up by 5 in recent months. 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 Oi SA (ADR) (NYSE:OIBR), Nautilus, Inc. (NYSE:NLS), and China Yuchai International Limited (NYSE:CYD) to gather more data points.

To most market participants, hedge funds are perceived as underperforming, outdated investment tools of yesteryear. While there are over 8000 funds trading at present, We choose to focus on the masters of this group, approximately 700 funds. Most estimates calculate that this group of people controls the majority of the hedge fund industry’s total asset base, and by shadowing their best investments, Insider Monkey has spotted a number of investment strategies that have historically defeated the broader indices. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Keeping this in mind, we’re going to take a peek at the fresh action encompassing TETRA Technologies, Inc. (NYSE:TTI).

What does the smart money think about TETRA Technologies, Inc. (NYSE:TTI)?

Heading into Q4, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 56% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Dmitry Balyasny’s Balyasny Asset Management has the biggest position in TETRA Technologies, Inc. (NYSE:TTI), worth close to $40.7 million, comprising 0.3% of its total 13F portfolio. The second largest stake is held by Millennium Management, managed by Israel Englander, which holds a $21 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions comprise D E Shaw, Ken Griffin’s Citadel Investment Group and Steve Cohen’s Point72 Asset Management.

As aggregate interest increased, some big names were breaking ground themselves. Centaur Capital Partners, managed by Zeke Ashton, initiated the biggest position in TETRA Technologies, Inc. (NYSE:TTI). Centaur Capital Partners had $1.8 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also initiated a $1.2 million position during the quarter. The other funds with new positions in the stock are Chao Ku’s Nine Chapters Capital Management, Paul Tudor Jones’ Tudor Investment Corp, and Joel Greenblatt’s Gotham Asset Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as TETRA Technologies, Inc. (NYSE:TTI) but similarly valued. These stocks are Oi SA (ADR) (NYSE:OIBR), Nautilus, Inc. (NYSE:NLS), China Yuchai International Limited (NYSE:CYD), and Clayton Williams Energy, Inc. (NASDAQ:CWEI). This group of stocks’ market caps is similar to TETRA Technologies, Inc. (NYSE:TTI)’s market cap.

As you can see, these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $80 million in TETRA Technologies, Inc. (NYSE:TTI)’s case. Nautilus, Inc. (NYSE:NLS) is the most popular stock in this table. On the other hand, China Yuchai International Limited (NYSE:CYD) is the least popular one with only 9 bullish hedge fund positions. TETRA Technologies, Inc. (NYSE:TTI) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Nautilus, Inc. (NYSE:NLS) might be a better candidate to consider a long position.