The TJX Companies, Inc. (TJX): Are Hedge Funds Right About This Stock?

Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. That’s why we pay special attention to hedge fund activity in these stocks.

The TJX Companies, Inc. (NYSE:TJX) has experienced an increase in enthusiasm from smart money in recent months. At the end of this article we will also compare TJX to other stocks including Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), General Motors Company (NYSE:GM), and EMC Corporation (NYSE:EMC) to get a better sense of its popularity.

Now, let’s review the recent action encompassing The TJX Companies, Inc. (NYSE:TJX).

How have hedgies been trading The TJX Companies, Inc. (NYSE:TJX)?

At Q3’s end, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the most valuable position in The TJX Companies, Inc. (NYSE:TJX). AQR Capital Management has an $153.8 million position in the stock, comprising 0.3% of its 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding an $150.3 million position; 0.7% of its 13F portfolio is allocated to the stock. Other professional money managers that hold long positions include  D E Shaw, Columbus Circle Investors and Ken Griffin’s Citadel Investment Group.

As one would reasonably expect, key money managers were leading the bulls’ herd. Columbus Circle Investors established the largest position in The TJX Companies, Inc. (NYSE:TJX). Columbus Circle Investors had $111.6 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made an $80.2 million investment in the stock during the quarter. The other funds with brand new TJX positions are Ben Gambill’s Tiger Eye Capital, Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital, and David Keidan’s Buckingham Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as The TJX Companies, Inc. (NYSE:TJX) but similarly valued. These stocks are Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), General Motors Company (NYSE:GM), EMC Corporation (NYSE:EMC), and Statoil ASA (ADR) (NYSE:STO). This group of stocks’ market valuations are closest to TJX’s market valuation.

As you can see these stocks had an average of 58.25 hedge funds with bullish positions and the average amount invested in these stocks was $3834 million. That figure was $1502 million in TJX’s case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand Statoil ASA (ADR) (NYSE:STO) is the least popular one with only 10 bullish hedge fund positions. The TJX Companies, Inc. (NYSE:TJX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard GM might be a better candidate to consider a long position.