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Hedge Funds Never Been Less Bullish On Tuesday Morning Corporation (TUES)

Debasis Saha

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Tuesday Morning Corporation (NASDAQ:TUES) based on that data.

Is Tuesday Morning Corporation (NASDAQ:TUES) a superb investment now? The smart money is becoming less confident. The number of bullish hedge fund bets were trimmed by 3 in recent months. Our calculations also showed that TUES 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 many signals stock market investors employ to size up stocks. A couple of the most innovative signals are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the top hedge fund managers can trounce the broader indices by a solid margin (see the details here).

[caption id="attachment_189632" align="aligncenter" width="400"] David Harding of Winton Capital Management[/caption]

David Harding

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to check out the recent hedge fund action surrounding Tuesday Morning Corporation (NASDAQ:TUES).

What have hedge funds been doing with Tuesday Morning Corporation (NASDAQ:TUES)?

At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -43% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards TUES 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.

Is TUES A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the largest position in Tuesday Morning Corporation (NASDAQ:TUES). Renaissance Technologies has a $1.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is David Harding of Winton Capital Management, with a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism contain John Overdeck and David Siegel's Two Sigma Advisors, Paul Tudor Jones's Tudor Investment Corp and . In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to Tuesday Morning Corporation (NASDAQ:TUES), around 0.0019% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.0011 percent of its 13F equity portfolio to TUES.

Judging by the fact that Tuesday Morning Corporation (NASDAQ:TUES) has witnessed falling interest from the smart money, we can see that there exists a select few hedge funds that slashed their full holdings last quarter. At the top of the heap, Chuck Royce's Royce & Associates cut the biggest position of all the hedgies monitored by Insider Monkey, totaling about $0.8 million in stock. Israel Englander's fund, Millennium Management, also dropped its stock, about $0.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 3 funds last quarter.

Let's also examine hedge fund activity in other stocks similar to Tuesday Morning Corporation (NASDAQ:TUES). These stocks are MV Oil Trust (NYSE:MVO), New Home Company Inc (NYSE:NWHM), Immutep Limited (NASDAQ:IMMP), and RealNetworks Inc (NASDAQ:RNWK). All of these stocks' market caps match TUES's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MVO,1,160,0 NWHM,8,2899,1 IMMP,3,278,2 RNWK,5,7169,-1 Average,4.25,2627,0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $1 million in TUES's case. New Home Company Inc (NYSE:NWHM) is the most popular stock in this table. On the other hand MV Oil Trust (NYSE:MVO) is the least popular one with only 1 bullish hedge fund positions. Tuesday Morning Corporation (NASDAQ:TUES) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately TUES wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); TUES investors were disappointed as the stock returned -56.7% during the second 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.

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