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 in recent 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 certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards ToughBuilt Industries, Inc. (NASDAQ:TBLT).
Is ToughBuilt Industries, Inc. (NASDAQ:TBLT) a bargain? Investors who are in the know were getting more optimistic. The number of bullish hedge fund bets rose by 1 recently. ToughBuilt Industries, Inc. (NASDAQ:TBLT) was in 4 hedge funds’ portfolios at the end of September. The all time high for this statistics is 3. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TBLT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Bart Baum of Ionic Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website. With all of this in mind we’re going to take a glance at the key hedge fund action surrounding ToughBuilt Industries, Inc. (NASDAQ:TBLT).
Hedge fund activity in ToughBuilt Industries, Inc. (NASDAQ:TBLT)
At Q3’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in TBLT over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ken Griffin’s Citadel Investment Group has the most valuable position in ToughBuilt Industries, Inc. (NASDAQ:TBLT), worth close to $0.1 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by Millennium Management, led by Israel Englander, holding a $0 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions encompass Bart Baum’s Ionic Capital Management, Sander Gerber’s Hudson Bay Capital Management and . In terms of the portfolio weights assigned to each position Ionic Capital Management allocated the biggest weight to ToughBuilt Industries, Inc. (NASDAQ:TBLT), around 0.0003% of its 13F portfolio. Citadel Investment Group is also relatively very bullish on the stock, setting aside 0 percent of its 13F equity portfolio to TBLT.
With a general bullishness amongst the heavyweights, specific money managers have jumped into ToughBuilt Industries, Inc. (NASDAQ:TBLT) headfirst. Citadel Investment Group, managed by Ken Griffin, created the most valuable position in ToughBuilt Industries, Inc. (NASDAQ:TBLT). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0 million position during the quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as ToughBuilt Industries, Inc. (NASDAQ:TBLT) but similarly valued. We will take a look at Data I/O Corporation (NASDAQ:DAIO), BIO-key International, Inc. (NASDAQ:BKYI), Hoth Therapeutics, Inc. (NASDAQ:HOTH), Neurotrope, Inc. (NASDAQ:NTRP), Senmiao Technology Limited (NASDAQ:AIHS), Neos Therapeutics Inc (NASDAQ:NEOS), and MV Oil Trust (NYSE:MVO). This group of stocks’ market values match TBLT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DAIO | 2 | 4411 | 0 |
| BKYI | 3 | 662 | 1 |
| HOTH | 1 | 156 | -1 |
| NTRP | 3 | 599 | 0 |
| AIHS | 3 | 105 | 2 |
| NEOS | 7 | 5505 | -1 |
| MVO | 1 | 107 | 0 |
| Average | 2.9 | 1649 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.9 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $0 million in TBLT’s case. Neos Therapeutics Inc (NASDAQ:NEOS) is the most popular stock in this table. On the other hand Hoth Therapeutics, Inc. (NASDAQ:HOTH) is the least popular one with only 1 bullish hedge fund positions. ToughBuilt Industries, Inc. (NASDAQ:TBLT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TBLT is 61. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on TBLT as the stock returned 19.1% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.