Is TD Ameritrade Holding Corp. (NASDAQ:AMTD) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
TD Ameritrade Holding Corp. (NASDAQ:AMTD) was in 22 hedge funds' portfolios at the end of June. AMTD has experienced a decrease in activity from the world's largest hedge funds recently. There were 30 hedge funds in our database with AMTD holdings at the end of the previous quarter. Our calculations also showed that AMTD isn't among the 30 most popular stocks among hedge funds. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most market participants, hedge funds are viewed as worthless, old investment vehicles of the past. While there are greater than 8000 funds in operation at the moment, Our experts choose to focus on the masters of this club, about 750 funds. Most estimates calculate that this group of people command most of the hedge fund industry's total capital, and by shadowing their best investments, Insider Monkey has revealed several investment strategies that have historically outrun the broader indices. Insider Monkey's flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's review the recent hedge fund action encompassing TD Ameritrade Holding Corp. (NASDAQ:AMTD).
How are hedge funds trading TD Ameritrade Holding Corp. (NASDAQ:AMTD)?
Heading into the third quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -27% from one quarter earlier. By comparison, 28 hedge funds held shares or bullish call options in AMTD a year ago. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
More specifically, Akre Capital Management was the largest shareholder of TD Ameritrade Holding Corp. (NASDAQ:AMTD), with a stake worth $167.2 million reported as of the end of March. Trailing Akre Capital Management was Renaissance Technologies, which amassed a stake valued at $81.1 million. Arrowstreet Capital, Crescent Park Management, and LMR Partners were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as TD Ameritrade Holding Corp. (NASDAQ:AMTD) has experienced bearish sentiment from the aggregate hedge fund industry, it's easy to see that there is a sect of funds that slashed their full holdings in the second quarter. At the top of the heap, Steve Cohen's Point72 Asset Management sold off the biggest stake of all the hedgies followed by Insider Monkey, comprising an estimated $9.9 million in stock, and Peter Seuss's Prana Capital Management was right behind this move, as the fund sold off about $3.9 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 8 funds in the second quarter.
Let's also examine hedge fund activity in other stocks similar to TD Ameritrade Holding Corp. (NASDAQ:AMTD). These stocks are Fiat Chrysler Automobiles NV (NYSE:FCAU), Fortive Corporation (NYSE:FTV), AutoZone, Inc. (NYSE:AZO), and Barrick Gold Corporation (NYSE:GOLD). This group of stocks' market values are similar to AMTD's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FCAU,28,1924226,1 FTV,28,362155,2 AZO,37,1123000,-5 GOLD,39,1162700,2 Average,33,1143020,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $1143 million. That figure was $486 million in AMTD's case. Barrick Gold Corporation (NYSE:GOLD) is the most popular stock in this table. On the other hand Fiat Chrysler Automobiles NV (NYSE:FCAU) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks TD Ameritrade Holding Corp. (NASDAQ:AMTD) is even less popular than FCAU. Hedge funds dodged a bullet by taking a bearish stance towards AMTD. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately AMTD wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); AMTD investors were disappointed as the stock returned -5.9% 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.