After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards TOMI Environmental Solutions, Inc. (NASDAQ:TOMZ).
Is TOMZ a good stock to buy? TOMI Environmental Solutions, Inc. (NASDAQ:TOMZ) was in 3 hedge funds’ portfolios at the end of March. The all time high for this statistic is 4. TOMZ has seen a decrease in enthusiasm from smart money in recent months. There were 4 hedge funds in our database with TOMZ positions at the end of the fourth quarter. Our calculations also showed that TOMZ isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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.
Ken Griffin of Citadel Investment Group
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. With all of this in mind we’re going to go over the key hedge fund action regarding TOMI Environmental Solutions, Inc. (NASDAQ:TOMZ).
Do Hedge Funds Think TOMZ Is A Good Stock To Buy Now?
At first quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in TOMZ a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Millennium Management held the most valuable stake in TOMI Environmental Solutions, Inc. (NASDAQ:TOMZ), which was worth $0.1 million at the end of the fourth quarter. On the second spot was G2 Investment Partners Management which amassed $0.1 million worth of shares. Citadel Investment Group was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position G2 Investment Partners Management allocated the biggest weight to TOMI Environmental Solutions, Inc. (NASDAQ:TOMZ), around 0.01% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, earmarking 0.0001 percent of its 13F equity portfolio to TOMZ.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Manatuck Hill Partners. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified TOMZ as a viable investment and initiated a position in the stock.
Let’s now take a look at hedge fund activity in other stocks similar to TOMI Environmental Solutions, Inc. (NASDAQ:TOMZ). We will take a look at Euroseas Ltd. (NASDAQ:ESEA), Trinity Place Holdings Inc. (NYSE:TPHS), BBQ Holdings, Inc. (NASDAQ:BBQ), Vaccinex, Inc. (NASDAQ:VCNX), AnPac Bio-Medical Science Co., Ltd. (NASDAQ:ANPC), Borqs Technologies, Inc. (NASDAQ:BRQS), and Pathfinder Bancorp, Inc. (NASDAQ:PBHC). All of these stocks’ market caps are closest to TOMZ’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ESEA | 1 | 1343 | -1 |
| TPHS | 8 | 30473 | 1 |
| BBQ | 4 | 26993 | 0 |
| VCNX | 2 | 196 | 1 |
| ANPC | 2 | 582 | 1 |
| BRQS | 3 | 610 | 0 |
| PBHC | 1 | 3621 | 0 |
| Average | 3 | 9117 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $0 million in TOMZ’s case. Trinity Place Holdings Inc. (NYSE:TPHS) is the most popular stock in this table. On the other hand Euroseas Ltd. (NASDAQ:ESEA) is the least popular one with only 1 bullish hedge fund positions. TOMI Environmental Solutions, Inc. (NASDAQ:TOMZ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TOMZ is 40.8. 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 negative signal and 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 surpassed the market again by 3.3 percentage points. Unfortunately TOMZ wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TOMZ investors were disappointed as the stock returned -28.4% 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.