Hedge fund managers like David Einhorn, Bill Ackman, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: The Container Store Group, Inc. (NYSE:TCS).
The Container Store Group, Inc. (NYSE:TCS) was in 12 hedge funds' portfolios at the end of the first quarter of 2019. TCS has experienced an increase in support from the world's most elite money managers lately. There were 11 hedge funds in our database with TCS positions at the end of the previous quarter. Our calculations also showed that tcs isn't among the 30 most popular stocks among hedge funds.
At the moment there are a lot of gauges shareholders can use to assess publicly traded companies. Two of the most innovative gauges are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the best investment managers can trounce their index-focused peers by a healthy margin (see the details here).
We're going to go over the new hedge fund action regarding The Container Store Group, Inc. (NYSE:TCS).
What have hedge funds been doing with The Container Store Group, Inc. (NYSE:TCS)?
Heading into the second quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TCS over the last 15 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Rutabaga Capital Management was the largest shareholder of The Container Store Group, Inc. (NYSE:TCS), with a stake worth $7.3 million reported as of the end of March. Trailing Rutabaga Capital Management was D E Shaw, which amassed a stake valued at $5.2 million. Renaissance Technologies, Royce & Associates, and Coatue Management were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, some big names have jumped into The Container Store Group, Inc. (NYSE:TCS) headfirst. Coatue Management, managed by Philippe Laffont, initiated the most valuable position in The Container Store Group, Inc. (NYSE:TCS). Coatue Management had $1.4 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $0.5 million position during the quarter. The other funds with brand new TCS positions are Gavin Saitowitz and Cisco J. del Valle's Springbok Capital, Paul Marshall and Ian Wace's Marshall Wace LLP, and Ken Griffin's Citadel Investment Group.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as The Container Store Group, Inc. (NYSE:TCS) but similarly valued. These stocks are Landmark Infrastructure Partners LP (NASDAQ:LMRK), Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL), Anika Therapeutics, Inc. (NASDAQ:ANIK), and GTY Technology Holdings, Inc. (NASDAQ:GTYH). This group of stocks' market caps are closest to TCS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LMRK,5,2531,1 RIGL,15,80038,-1 ANIK,15,47624,1 GTYH,9,13799,-2 Average,11,35998,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $23 million in TCS's case. Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) is the most popular stock in this table. On the other hand Landmark Infrastructure Partners LP (NASDAQ:LMRK) is the least popular one with only 5 bullish hedge fund positions. The Container Store Group, Inc. (NYSE:TCS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately TCS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TCS were disappointed as the stock returned -12.5% during the same 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.