We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money 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 (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Tiptree Inc. (NASDAQ:TIPT).
Is Tiptree Inc. (NASDAQ:TIPT) a cheap investment today? Hedge funds were in a bullish mood. The number of bullish hedge fund bets improved by 1 lately. Tiptree Inc. (NASDAQ:TIPT) was in 3 hedge funds’ portfolios at the end of September. The all time high for this statistics is 7. Our calculations also showed that TIPT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 2 hedge funds in our database with TIPT holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Fred DiSanto of Ancora Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we’re going to take a gander at the latest hedge fund action encompassing Tiptree Inc. (NASDAQ:TIPT).
Hedge fund activity in Tiptree Inc. (NASDAQ:TIPT)
At Q3’s end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TIPT over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Ancora Advisors was the largest shareholder of Tiptree Inc. (NASDAQ:TIPT), with a stake worth $0.6 million reported as of the end of September. Trailing Ancora Advisors was Renaissance Technologies, which amassed a stake valued at $0.2 million. Arrowstreet Capital was 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 Ancora Advisors allocated the biggest weight to Tiptree Inc. (NASDAQ:TIPT), around 0.02% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0002 percent of its 13F equity portfolio to TIPT.
Consequently, some big names have jumped into Tiptree Inc. (NASDAQ:TIPT) headfirst. Renaissance Technologies, assembled the largest position in Tiptree Inc. (NASDAQ:TIPT). Renaissance Technologies had $0.2 million invested in the company at the end of the quarter.
Let’s check out hedge fund activity in other stocks similar to Tiptree Inc. (NASDAQ:TIPT). These stocks are Oil States International, Inc. (NYSE:OIS), Sol-Gel Technologies Ltd. (NASDAQ:SLGL), Universal Technical Institute, Inc. (NYSE:UTI), Eton Pharmaceuticals, Inc. (NASDAQ:ETON), Grupo Supervielle S.A. (NYSE:SUPV), GP Strategies Corporation (NYSE:GPX), and National Bankshares Inc. (NASDAQ:NKSH). All of these stocks’ market caps are closest to TIPT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OIS | 12 | 10351 | -1 |
| SLGL | 2 | 6172 | -1 |
| UTI | 14 | 39515 | 2 |
| ETON | 4 | 29256 | 1 |
| SUPV | 3 | 414 | -1 |
| GPX | 9 | 49256 | -2 |
| NKSH | 3 | 11806 | 1 |
| Average | 6.7 | 20967 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.7 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $1 million in TIPT’s case. Universal Technical Institute, Inc. (NYSE:UTI) is the most popular stock in this table. On the other hand Sol-Gel Technologies Ltd. (NASDAQ:SLGL) is the least popular one with only 2 bullish hedge fund positions. Tiptree Inc. (NASDAQ:TIPT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TIPT is 23. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on TIPT, though not to the same extent, as the stock returned 6.9% since the end of Q3 (through November 23rd) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.
