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 Teleflex Incorporated (NYSE:TFX) and determine whether hedge funds skillfully traded this stock.
Teleflex Incorporated (NYSE:TFX) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 32 hedge funds' portfolios at the end of the first quarter of 2020. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Avangrid, Inc. (NYSE:AGR), Take-Two Interactive Software, Inc. (NASDAQ:TTWO), and M&T Bank Corporation (NYSE:MTB) to gather more data points. Our calculations also showed that TFX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are dozens of tools stock traders can use to value their stock investments. A pair of the most useful tools are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can outpace the market by a superb amount (see the details here).
[caption id="attachment_262340" align="aligncenter" width="399"] Arthur B Cohen and Joseph Healey of Healthcor Management LP[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let's check out the fresh hedge fund action surrounding Teleflex Incorporated (NYSE:TFX).
How are hedge funds trading Teleflex Incorporated (NYSE:TFX)?
At the end of the first quarter, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in TFX over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Select Equity Group, managed by Robert Joseph Caruso, holds the most valuable position in Teleflex Incorporated (NYSE:TFX). Select Equity Group has a $192.2 million position in the stock, comprising 1.3% of its 13F portfolio. Sitting at the No. 2 spot is Marshall Wace LLP, led by Paul Marshall and Ian Wace, holding a $122.4 million position; 1.2% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions consist of Arthur B Cohen and Joseph Healey's Healthcor Management LP, Rajiv Jain's GQG Partners and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Healthcor Management LP allocated the biggest weight to Teleflex Incorporated (NYSE:TFX), around 5.09% of its 13F portfolio. Osterweis Capital Management is also relatively very bullish on the stock, designating 1.63 percent of its 13F equity portfolio to TFX.
Judging by the fact that Teleflex Incorporated (NYSE:TFX) has witnessed declining sentiment from hedge fund managers, it's safe to say that there was a specific group of hedgies who were dropping their full holdings by the end of the first quarter. Interestingly, Brian Ashford-Russell and Tim Woolley's Polar Capital said goodbye to the largest position of the "upper crust" of funds followed by Insider Monkey, comprising an estimated $34.9 million in stock. Bhagwan Jay Rao's fund, Integral Health Asset Management, also dropped its stock, about $7.9 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Teleflex Incorporated (NYSE:TFX) but similarly valued. We will take a look at Avangrid, Inc. (NYSE:AGR), Take-Two Interactive Software, Inc. (NASDAQ:TTWO), M&T Bank Corporation (NYSE:MTB), and W.W. Grainger, Inc. (NYSE:GWW). This group of stocks' market caps match TFX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AGR,18,242937,-1 TTWO,66,1949928,7 MTB,21,687380,-11 GWW,26,345842,-3 Average,32.75,806522,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.75 hedge funds with bullish positions and the average amount invested in these stocks was $807 million. That figure was $766 million in TFX's case. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is the most popular stock in this table. On the other hand Avangrid, Inc. (NYSE:AGR) is the least popular one with only 18 bullish hedge fund positions. Teleflex Incorporated (NYSE:TFX) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on TFX, though not to the same extent, as the stock returned 24.4% during the second quarter and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.