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Hedge Fund Darlings vs. Talend S.A. (TLND) In 2019

Nina Todic

We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained more than 57% each. Hedge funds' top 3 stock picks returned 44.6% this year and beat the S&P 500 ETFs by almost 14 percentage points. That's a big deal. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Talend S.A. (NASDAQ:TLND) shareholders have witnessed an increase in enthusiasm from smart money lately. TLND was in 28 hedge funds' portfolios at the end of the third quarter of 2019. There were 24 hedge funds in our database with TLND positions at the end of the previous quarter. Our calculations also showed that TLND isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_783421" align="aligncenter" width="473"] Ryan Frick of Dorsal Capital[/caption]

Ryan Frick Dorsal Capital

We leave no stone unturned when looking for the next great investment idea. For example one of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock is still extremely cheap despite already gaining 20 percent. Keeping this in mind we're going to take a gander at the fresh hedge fund action regarding Talend S.A. (NASDAQ:TLND).

How have hedgies been trading Talend S.A. (NASDAQ:TLND)?

At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TLND over the last 17 quarters. With hedge funds' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Kevin Oram and Peter Uddo's Praesidium Investment Management has the most valuable position in Talend S.A. (NASDAQ:TLND), worth close to $60.9 million, corresponding to 4% of its total 13F portfolio. On Praesidium Investment Management's heels is Peter S. Park of Park West Asset Management, with a $47.9 million position; 2.3% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism encompass John Smith Clark's Southpoint Capital Advisors, Ryan Frick and Oliver Evans's Dorsal Capital Management and Will Cook's Sunriver Management. In terms of the portfolio weights assigned to each position Sheffield Asset Management allocated the biggest weight to Talend S.A. (NASDAQ:TLND), around 9.88% of its 13F portfolio. Sunriver Management is also relatively very bullish on the stock, designating 6.93 percent of its 13F equity portfolio to TLND.

Now, specific money managers were breaking ground themselves. Light Street Capital, managed by Glen Kacher, created the biggest position in Talend S.A. (NASDAQ:TLND). Light Street Capital had $25.2 million invested in the company at the end of the quarter. Douglas Dossey and Arthur Young's Tensile Capital also initiated a $17.5 million position during the quarter. The other funds with brand new TLND positions are Zachary Miller's Parian Global Management, Mark N. Diker's Diker Management, and Charles Davidson and Joseph Jacobs's Wexford Capital.

Let's now take a look at hedge fund activity in other stocks similar to Talend S.A. (NASDAQ:TLND). We will take a look at Omega Flex, Inc. (NASDAQ:OFLX), Granite Point Mortgage Trust Inc. (NYSE:GPMT), Chase Corporation (NYSE:CCF), and The St. Joe Company (NYSE:JOE). All of these stocks' market caps are similar to TLND's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OFLX,4,5556,1 GPMT,6,13231,-3 CCF,7,86633,-1 JOE,9,503471,-3 Average,6.5,152223,-1.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $152 million. That figure was $421 million in TLND's case. The St. Joe Company (NYSE:JOE) is the most popular stock in this table. On the other hand Omega Flex, Inc. (NASDAQ:OFLX) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Talend S.A. (NASDAQ:TLND) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately TLND wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TLND were disappointed as the stock returned 10.7% so far in 2019 (through 12/23) and trailed 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 65 percent of these stocks already outperformed the market in 2019. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

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