We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31st. We at Insider Monkey have made an extensive database of more than 835 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded TTM Technologies, Inc. (NASDAQ:TTMI) based on those filings.
TTM Technologies, Inc. (NASDAQ:TTMI) was in 11 hedge funds’ portfolios at the end of December. TTMI shareholders have witnessed a decrease in enthusiasm from smart money lately. There were 12 hedge funds in our database with TTMI holdings at the end of the previous quarter. Our calculations also showed that TTMI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the financial world there are several signals stock traders can use to grade stocks. A couple of the less utilized signals are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top money managers can outclass their index-focused peers by a solid margin (see the details here).
Joel Greenblatt of Gotham Asset Management
We leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve and other Central Banks are tripping over each other to print more money. As a result, we believe gold stocks will outperform fixed income ETFs in the long-term. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to review the recent hedge fund action encompassing TTM Technologies, Inc. (NASDAQ:TTMI).
Hedge fund activity in TTM Technologies, Inc. (NASDAQ:TTMI)
At the end of the fourth quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in TTMI a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in TTM Technologies, Inc. (NASDAQ:TTMI) was held by Divisar Capital, which reported holding $15.3 million worth of stock at the end of September. It was followed by Royce & Associates with a $8.5 million position. Other investors bullish on the company included Two Sigma Advisors, Gotham Asset Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Divisar Capital allocated the biggest weight to TTM Technologies, Inc. (NASDAQ:TTMI), around 4.3% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.08 percent of its 13F equity portfolio to TTMI.
Seeing as TTM Technologies, Inc. (NASDAQ:TTMI) has faced bearish sentiment from hedge fund managers, logic holds that there was a specific group of money managers that slashed their entire stakes heading into Q4. Interestingly, Ken Griffin’s Citadel Investment Group dumped the largest stake of the 750 funds watched by Insider Monkey, comprising about $1.1 million in call options, and D. E. Shaw’s D E Shaw was right behind this move, as the fund dropped about $0.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 1 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as TTM Technologies, Inc. (NASDAQ:TTMI) but similarly valued. These stocks are S & T Bancorp Inc (NASDAQ:STBA), Linx S.A. (NYSE:LINX), Enerplus Corp (NYSE:ERF), and InVitae Corporation (NYSE:NVTA). This group of stocks’ market valuations resemble TTMI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STBA | 9 | 8690 | -2 |
| LINX | 4 | 31516 | -1 |
| ERF | 20 | 168554 | 3 |
| NVTA | 13 | 277519 | 0 |
| Average | 11.5 | 121570 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $122 million. That figure was $31 million in TTMI’s case. Enerplus Corp (NYSE:ERF) is the most popular stock in this table. On the other hand Linx S.A. (NYSE:LINX) is the least popular one with only 4 bullish hedge fund positions. TTM Technologies, Inc. (NASDAQ:TTMI) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but beat the market by 4.2 percentage points. Unfortunately TTMI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TTMI investors were disappointed as the stock returned -30.2% during the same time period 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 most of these stocks already outperformed the market in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
