In this article we will check out the progression of hedge fund sentiment towards TransAct Technologies Incorporated (NASDAQ:TACT) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Hedge fund interest in TransAct Technologies Incorporated (NASDAQ:TACT) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Data I/O Corporation (NASDAQ:DAIO), Bellicum Pharmaceuticals Inc (NASDAQ:BLCM), and Sotherly Hotels Inc (NASDAQ:SOHO) to gather more data points. Our calculations also showed that TACT isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.
Rudolph Kluiber of GRT Capital Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the recent hedge fund action surrounding TransAct Technologies Incorporated (NASDAQ:TACT).
What have hedge funds been doing with TransAct Technologies Incorporated (NASDAQ:TACT)?
At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2019. By comparison, 4 hedge funds held shares or bullish call options in TACT a year ago. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in TransAct Technologies Incorporated (NASDAQ:TACT) was held by Harbert Management, which reported holding $1.3 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $1.3 million position. Other investors bullish on the company included GAMCO Investors, Royce & Associates, and GRT Capital Partners. In terms of the portfolio weights assigned to each position Harbert Management allocated the biggest weight to TransAct Technologies Incorporated (NASDAQ:TACT), around 2.23% of its 13F portfolio. GRT Capital Partners is also relatively very bullish on the stock, setting aside 0.06 percent of its 13F equity portfolio to TACT.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the first quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now review hedge fund activity in other stocks similar to TransAct Technologies Incorporated (NASDAQ:TACT). We will take a look at Data I/O Corporation (NASDAQ:DAIO), Bellicum Pharmaceuticals Inc (NASDAQ:BLCM), Sotherly Hotels Inc (NASDAQ:SOHO), and Hi-Crush Inc. (NYSE:HCR). This group of stocks’ market values match TACT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DAIO | 1 | 1776 | -1 |
| BLCM | 6 | 2949 | -1 |
| SOHO | 2 | 1268 | 0 |
| HCR | 3 | 759 | -2 |
| Average | 3 | 1688 | -1 |
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 $2 million. That figure was $3 million in TACT’s case. Bellicum Pharmaceuticals Inc (NASDAQ:BLCM) is the most popular stock in this table. On the other hand Data I/O Corporation (NASDAQ:DAIO) is the least popular one with only 1 bullish hedge fund positions. TransAct Technologies Incorporated (NASDAQ:TACT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on TACT as the stock returned 31.8% in Q2 (through the end of May) 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.
