In this article we will check out the progression of hedge fund sentiment towards Target Corporation (NYSE:TGT) 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.
Target Corporation (NYSE:TGT) investors should be aware of an increase in hedge fund sentiment lately. Target Corporation (NYSE:TGT) was in 66 hedge funds’ portfolios at the end of June. The all time high for this statistic is 78. There were 60 hedge funds in our database with TGT holdings at the end of March. Our calculations also showed that TGT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, the demand for helium is soaring and there is a helium supply shortage, so we are checking out stock pitches like this emerging helium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s take a glance at the latest hedge fund action regarding Target Corporation (NYSE:TGT).
Do Hedge Funds Think TGT Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 66 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. By comparison, 54 hedge funds held shares or bullish call options in TGT a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, GQG Partners was the largest shareholder of Target Corporation (NYSE:TGT), with a stake worth $1430.4 million reported as of the end of June. Trailing GQG Partners was Renaissance Technologies, which amassed a stake valued at $870.4 million. AQR Capital Management, Citadel Investment Group, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Rip Road Capital allocated the biggest weight to Target Corporation (NYSE:TGT), around 5.69% of its 13F portfolio. GQG Partners is also relatively very bullish on the stock, dishing out 4.2 percent of its 13F equity portfolio to TGT.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Melvin Capital Management, managed by Gabriel Plotkin, created the biggest position in Target Corporation (NYSE:TGT). Melvin Capital Management had $175.3 million invested in the company at the end of the quarter. James Parsons’s Junto Capital Management also initiated a $45.8 million position during the quarter. The other funds with new positions in the stock are Gregg Moskowitz’s Interval Partners, Simon Sadler’s Segantii Capital, and Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Target Corporation (NYSE:TGT) but similarly valued. We will take a look at Caterpillar Inc. (NYSE:CAT), TotalEnergies SE (NYSE:TTE), General Electric Company (NYSE:GE), HSBC Holdings plc (NYSE:HSBC), Vale SA (NYSE:VALE), The Estee Lauder Companies Inc (NYSE:EL), and 3M Company (NYSE:MMM). This group of stocks’ market valuations match TGT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CAT | 62 | 5264268 | 9 |
| TTE | 15 | 1132420 | -2 |
| GE | 67 | 6087180 | -1 |
| HSBC | 11 | 212763 | -1 |
| VALE | 27 | 3573958 | -4 |
| EL | 50 | 4129744 | -9 |
| MMM | 42 | 1582540 | 1 |
| Average | 39.1 | 3140410 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.1 hedge funds with bullish positions and the average amount invested in these stocks was $3140 million. That figure was $5865 million in TGT’s case. General Electric Company (NYSE:GE) is the most popular stock in this table. On the other hand HSBC Holdings plc (NYSE:HSBC) is the least popular one with only 11 bullish hedge fund positions. Target Corporation (NYSE:TGT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TGT is 84.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 26.3% in 2021 through October 29th and still beat the market by 2.3 percentage points. Hedge funds were also right about betting on TGT as the stock returned 7.8% since the end of Q2 (through 10/29) 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.
