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Did Hedge Funds Drop The Ball On TTM Technologies, Inc. (TTMI)?

Reymerlyn Martin

Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors' money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

TTM Technologies, Inc. (NASDAQ:TTMI) has seen a decrease in enthusiasm from smart money lately. TTMI was in 15 hedge funds' portfolios at the end of December. There were 16 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.

To most market participants, hedge funds are assumed to be underperforming, outdated financial tools of the past. While there are over 8000 funds trading at present, We hone in on the crème de la crème of this group, around 750 funds. Most estimates calculate that this group of people command the lion's share of all hedge funds' total capital, and by shadowing their inimitable equity investments, Insider Monkey has uncovered a number of investment strategies that have historically outperformed the S&P 500 index. Insider Monkey's flagship hedge fund strategy outstripped the S&P 500 index by nearly 5 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

Dmitry Balyasny

We're going to analyze the fresh hedge fund action surrounding TTM Technologies, Inc. (NASDAQ:TTMI).

Hedge fund activity in TTM Technologies, Inc. (NASDAQ:TTMI)

At the end of the fourth quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in TTMI a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

TTMI_apr2019

Among these funds, Royce & Associates held the most valuable stake in TTM Technologies, Inc. (NASDAQ:TTMI), which was worth $11.3 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $6.5 million worth of shares. Moreover, Marshall Wace LLP, Renaissance Technologies, and D E Shaw were also bullish on TTM Technologies, Inc. (NASDAQ:TTMI), allocating a large percentage of their portfolios to this stock.

Because TTM Technologies, Inc. (NASDAQ:TTMI) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there exists a select few fund managers who were dropping their positions entirely in the third quarter. Intriguingly, David Harding's Winton Capital Management cut the biggest investment of all the hedgies tracked by Insider Monkey, valued at about $5.2 million in stock. Matthew Tewksbury's fund, Stevens Capital Management, also said goodbye to its stock, about $0.4 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 1 funds in the third quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as TTM Technologies, Inc. (NASDAQ:TTMI) but similarly valued. We will take a look at KEMET Corporation (NYSE:KEM), Camping World Holdings, Inc. (NYSE:CWH), Diplomat Pharmacy Inc (NYSE:DPLO), and Investment Technology Group (NYSE:ITG). This group of stocks' market values are closest to TTMI's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KEM,21,159175,1 CWH,11,71232,-6 DPLO,10,62300,-3 ITG,14,85669,4 Average,14,94594,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $95 million. That figure was $36 million in TTMI's case. KEMET Corporation (NYSE:KEM) is the most popular stock in this table. On the other hand Diplomat Pharmacy Inc (NYSE:DPLO) is the least popular one with only 10 bullish hedge fund positions. TTM Technologies, Inc. (NASDAQ:TTMI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on TTMI as the stock returned 38.2% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.

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