We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards The TJX Companies, Inc. (NYSE:TJX) and determine whether hedge funds skillfully traded this stock.
The TJX Companies, Inc. (NYSE:TJX) shareholders have witnessed an increase in hedge fund interest recently. The TJX Companies, Inc. (NYSE:TJX) was in 63 hedge funds’ portfolios at the end of September. The all time high for this statistic is 78. There were 56 hedge funds in our database with TJX holdings at the end of June. Our calculations also showed that TJX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Noam Gottesman of GLG Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s check out the new hedge fund action surrounding The TJX Companies, Inc. (NYSE:TJX).
Do Hedge Funds Think TJX Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 63 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from one quarter earlier. By comparison, 78 hedge funds held shares or bullish call options in TJX a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Alkeon Capital Management was the largest shareholder of The TJX Companies, Inc. (NYSE:TJX), with a stake worth $434.4 million reported as of the end of September. Trailing Alkeon Capital Management was Holocene Advisors, which amassed a stake valued at $331.7 million. D E Shaw, GLG Partners, and Arrowstreet Capital 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 Broad Bay Capital allocated the biggest weight to The TJX Companies, Inc. (NYSE:TJX), around 9.19% of its 13F portfolio. Rip Road Capital is also relatively very bullish on the stock, setting aside 5.28 percent of its 13F equity portfolio to TJX.
As industrywide interest jumped, specific money managers were breaking ground themselves. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, assembled the largest position in The TJX Companies, Inc. (NYSE:TJX). Senator Investment Group had $79.2 million invested in the company at the end of the quarter. Gabriel Plotkin’s Melvin Capital Management also made a $72.6 million investment in the stock during the quarter. The other funds with new positions in the stock are James Parsons’s Junto Capital Management, Robert Pohly’s Samlyn Capital, and Steve Cohen’s Point72 Asset Management.
Let’s now take a look at hedge fund activity in other stocks similar to The TJX Companies, Inc. (NYSE:TJX). We will take a look at Truist Financial Corporation (NYSE:TFC), HCA Healthcare Inc (NYSE:HCA), Zoom Video Communications, Inc. (NASDAQ:ZM), Marsh & McLennan Companies, Inc. (NYSE:MMC), General Motors Company (NYSE:GM), Fidelity National Information Services Inc. (NYSE:FIS), and Duke Energy Corporation (NYSE:DUK). All of these stocks’ market caps are similar to TJX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TFC | 34 | 275906 | -5 |
| HCA | 72 | 3309822 | 12 |
| ZM | 56 | 6003836 | -3 |
| MMC | 42 | 1987176 | 1 |
| GM | 77 | 6416552 | -9 |
| FIS | 69 | 6044245 | -3 |
| DUK | 32 | 687541 | -4 |
| Average | 54.6 | 3532154 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 54.6 hedge funds with bullish positions and the average amount invested in these stocks was $3532 million. That figure was $2330 million in TJX’s case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand Duke Energy Corporation (NYSE:DUK) is the least popular one with only 32 bullish hedge fund positions. The TJX Companies, Inc. (NYSE:TJX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TJX is 68.7. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on TJX as the stock returned 9.5% since the end of Q3 (through 1/31) 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.
