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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Interface, Inc. (NASDAQ:TILE) and determine whether the smart money was really smart about this stock.
Is Interface, Inc. (NASDAQ:TILE) a buy here? Hedge funds were taking a bullish view. The number of long hedge fund bets rose by 4 in recent months. Interface, Inc. (NASDAQ:TILE) was in 19 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 25. Our calculations also showed that TILE isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
At the moment there are numerous signals market participants employ to size up stocks. A couple of the less known signals are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can outpace the broader indices by a solid margin (see the details here).
Donald Sussman of Paloma Partners
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 are checking out this junior gold mining stock and 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 to get excerpts of these letters in your inbox. Keeping this in mind let's take a look at the new hedge fund action regarding Interface, Inc. (NASDAQ:TILE).
How have hedgies been trading Interface, Inc. (NASDAQ:TILE)?
At the end of the second quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from the previous quarter. On the other hand, there were a total of 12 hedge funds with a bullish position in TILE a year ago. With hedge funds' capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Among these funds, D E Shaw held the most valuable stake in Interface, Inc. (NASDAQ:TILE), which was worth $4.5 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $3.8 million worth of shares. Citadel Investment Group, Millennium Management, and Royce & Associates were 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 Zebra Capital Management allocated the biggest weight to Interface, Inc. (NASDAQ:TILE), around 0.44% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, dishing out 0.25 percent of its 13F equity portfolio to TILE.
Consequently, specific money managers have jumped into Interface, Inc. (NASDAQ:TILE) headfirst. Millennium Management, managed by Israel Englander, established the most outsized position in Interface, Inc. (NASDAQ:TILE). Millennium Management had $2.5 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $1.4 million position during the quarter. The other funds with brand new TILE positions are Benjamin A. Smith's Laurion Capital Management, Peter Muller's PDT Partners, and Donald Sussman's Paloma Partners.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Interface, Inc. (NASDAQ:TILE) but similarly valued. These stocks are Urstadt Biddle Properties Inc (NYSE:UBA), City Office REIT Inc (NYSE:CIO), U.S. Lime & Minerals Inc. (NASDAQ:USLM), Hycroft Mining Holding Corporation (NASDAQ:HYMC), International Money Express, Inc. (NASDAQ:IMXI), Ennis, Inc. (NYSE:EBF), and HF Foods Group Inc. (NASDAQ:HFFG). All of these stocks' market caps match TILE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UBA,15,23561,7 CIO,13,41586,-2 USLM,4,32442,1 HYMC,7,321768,2 IMXI,13,98072,4 EBF,10,64561,1 HFFG,3,3123,3 Average,9.3,83588,2.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.3 hedge funds with bullish positions and the average amount invested in these stocks was $84 million. That figure was $22 million in TILE's case. Urstadt Biddle Properties Inc (NYSE:UBA) is the most popular stock in this table. On the other hand HF Foods Group Inc. (NASDAQ:HFFG) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Interface, Inc. (NASDAQ:TILE) is more popular among hedge funds. Our overall hedge fund sentiment score for TILE is 81.8. 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 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 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. Unfortunately TILE wasn't nearly as popular as these 10 stocks and hedge funds that were betting on TILE were disappointed as the stock returned -24.7% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.