Hedge Funds Have Never Been More Bullish On The Trade Desk, Inc. (TTD)
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. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th, 2019. In this article we are going to take a look at smart money sentiment towards The Trade Desk, Inc. (NASDAQ:TTD).
Is The Trade Desk, Inc. (NASDAQ:TTD) a good investment now? Prominent investors are taking an optimistic view. The number of long hedge fund bets went up by 1 in recent months. Our calculations also showed that TTD isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). TTD was in 25 hedge funds' portfolios at the end of September. There were 24 hedge funds in our database with TTD positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? 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_26340" align="aligncenter" width="467"]
Ken Griffin of Citadel Investment Group[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's review the key hedge fund action surrounding The Trade Desk, Inc. (NASDAQ:TTD).
What have hedge funds been doing with The Trade Desk, Inc. (NASDAQ:TTD)?
At Q3's end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TTD over the last 17 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Alkeon Capital Management held the most valuable stake in The Trade Desk, Inc. (NASDAQ:TTD), which was worth $187.6 million at the end of the third quarter. On the second spot was D E Shaw which amassed $154.7 million worth of shares. Arrowstreet Capital, Whale Rock Capital Management, and Citadel Investment Group 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 Ogborne Capital allocated the biggest weight to The Trade Desk, Inc. (NASDAQ:TTD), around 6.9% of its portfolio. Tairen Capital is also relatively very bullish on the stock, setting aside 1.75 percent of its 13F equity portfolio to TTD.
Consequently, key hedge funds have been driving this bullishness. Alkeon Capital Management, managed by Panayotis Takis Sparaggis, created the most outsized call position in The Trade Desk, Inc. (NASDAQ:TTD). Alkeon Capital Management had $187.6 million invested in the company at the end of the quarter. Benjamin A. Smith's Laurion Capital Management also initiated a $13.5 million position during the quarter. The following funds were also among the new TTD investors: Larry Chen and Terry Zhang's Tairen Capital, Doug Gordon, Jon Hilsabeck and Don Jabro's Shellback Capital, and Alexander Mitchell's Scopus Asset Management.
Let's check out hedge fund activity in other stocks similar to The Trade Desk, Inc. (NASDAQ:TTD). We will take a look at Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), Nordson Corporation (NASDAQ:NDSN), Aspen Technology, Inc. (NASDAQ:AZPN), and Westlake Chemical Corporation (NYSE:WLK). This group of stocks' market caps are closest to TTD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IONS,25,379230,7 NDSN,15,43658,-2 AZPN,28,1267011,2 WLK,18,352906,-5 Average,21.5,510701,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $511 million. That figure was $389 million in TTD's case. Aspen Technology, Inc. (NASDAQ:AZPN) is the most popular stock in this table. On the other hand Nordson Corporation (NASDAQ:NDSN) is the least popular one with only 15 bullish hedge fund positions. The Trade Desk, Inc. (NASDAQ:TTD) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on TTD as the stock returned 40.4% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
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