TCF Financial Corporation (TCB): Hedge Funds Are Snapping Up

Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze TCF Financial Corporation (NYSE:TCB) from the perspective of those elite funds.

TCF Financial Corporation (NYSE:TCB) investors should pay attention to an increase in enthusiasm from smart money lately. At the end of this article we will also compare TCB to other stocks, including New Jersey Resources Corp (NYSE:NJR), TAL Education Group (ADR) (NYSE:XRS), and Mindray Medical International Ltd (ADR) (NYSE:MR) to get a better sense of its popularity.

If you’d ask most investors, hedge funds are assumed to be underperforming, old investment tools of years past. While there are over 8000 funds trading at the moment, We choose to focus on the top tier of this group, about 700 funds. Most estimates calculate that this group of people orchestrate most of the hedge fund industry’s total asset base, and by paying attention to their inimitable picks, Insider Monkey has deciphered various investment strategies that have historically exceeded the market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.

With all of this in mind, let’s take a glance at the fresh action surrounding TCF Financial Corporation (NYSE:TCB).

What does the smart money think about TCF Financial Corporation (NYSE:TCB)?

Heading into Q4, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 24% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Israel Englander’s Millennium Management has the number one position in TCF Financial Corporation (NYSE:TCB), worth close to $74.1 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Lee Munder of Lee Munder Capital Group, with a $31.5 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions contain Richard S. Pzena’s Pzena Investment Management, Matthew Lindenbaum’s Basswood Capital and Jim Simons’s Renaissance Technologies.

Now, some big names were leading the bulls’ herd. Jabre Capital Partners, managed by Philippe Jabre, established the largest call position in TCF Financial Corporation (NYSE:TCB). According to its latest 13F filing, the fund had $3.5 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $2.3 million position during the quarter. The following funds were also among the new TCB investors: Matthew Tewksbury’s Stevens Capital Management, Mike Vranos’s Ellington, and Cliff Asness’s AQR Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as TCF Financial Corporation (NYSE:TCB) but similarly valued. These stocks are New Jersey Resources Corp (NYSE:NJR), TAL Education Group (ADR) (NYSE:XRS), Mindray Medical International Ltd (ADR) (NYSE:MR), and Blackstone Mortgage Trust Inc (NYSE:BXMT). This group of stocks’ market caps resemble TCB’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 $178 million. That figure was $213 million in TCB’s case. Blackstone Mortgage Trust Inc (NYSE:BXMT) is leading the pack, while Mindray Medical International Ltd (ADR) (NYSE:MR) is the least popular one with only 10 bullish hedge fund positions. TCF Financial Corporation (NYSE:TCB) 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. In this regard BXMT might be a better candidate to consider a long position.