Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the fourth quarter of 2018 we observed increased volatility and a 20% drop in stock prices. Things completely reversed in 2019 and stock indices hit record highs. Recent hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards TiVo Corporation (NASDAQ:TIVO) to find out whether it was one of their high conviction long-term ideas.
TiVo Corporation (NASDAQ:TIVO) was in 21 hedge funds’ portfolios at the end of the third quarter of 2019. TIVO investors should pay attention to an increase in activity from the world’s largest hedge funds lately. There were 19 hedge funds in our database with TIVO holdings at the end of the previous quarter. Our calculations also showed that TIVO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Jamie Zimmerman of Litespeed Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to check out the latest hedge fund action encompassing TiVo Corporation (NASDAQ:TIVO).
How have hedgies been trading TiVo Corporation (NASDAQ:TIVO)?
Heading into the fourth quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TIVO over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in TiVo Corporation (NASDAQ:TIVO) was held by Engaged Capital, which reported holding $19.2 million worth of stock at the end of September. It was followed by Lynrock Lake with a $18.6 million position. Other investors bullish on the company included Renaissance Technologies, Citadel Investment Group, and Clearline Capital. In terms of the portfolio weights assigned to each position Litespeed Management allocated the biggest weight to TiVo Corporation (NASDAQ:TIVO), around 11.44% of its 13F portfolio. Clearline Capital is also relatively very bullish on the stock, earmarking 4.43 percent of its 13F equity portfolio to TIVO.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Litespeed Management, managed by Jamie Zimmerman, assembled the biggest position in TiVo Corporation (NASDAQ:TIVO). Litespeed Management had $8.4 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, Michael Gelband’s ExodusPoint Capital, and Donald Sussman’s Paloma Partners.
Let’s now review hedge fund activity in other stocks similar to TiVo Corporation (NASDAQ:TIVO). These stocks are CareDx, Inc. (NASDAQ:CDNA), Turquoise Hill Resources Ltd (NYSE:TRQ), Big Lots, Inc. (NYSE:BIG), and 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS). This group of stocks’ market caps match TIVO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CDNA | 22 | 104501 | -2 |
| TRQ | 19 | 207845 | -1 |
| BIG | 21 | 82166 | 1 |
| FLWS | 20 | 64087 | -1 |
| Average | 20.5 | 114650 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $115 million. That figure was $96 million in TIVO’s case. CareDx, Inc. (NASDAQ:CDNA) is the most popular stock in this table. On the other hand Turquoise Hill Resources Ltd (NYSE:TRQ) is the least popular one with only 19 bullish hedge fund positions. TiVo Corporation (NASDAQ:TIVO) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately TIVO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TIVO were disappointed as the stock returned 2.5% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
