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Hedge Funds Are Selling Tetra Tech, Inc. (TTEK)

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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 have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider Tetra Tech, Inc. (NASDAQ:TTEK) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

Tetra Tech, Inc. (NASDAQ:TTEK) was in 23 hedge funds' portfolios at the end of March. The all time high for this statistic is 29. TTEK has seen a decrease in activity from the world's largest hedge funds lately. There were 29 hedge funds in our database with TTEK positions at the end of the fourth quarter. Our calculations also showed that TTEK isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

At the moment there are plenty of methods shareholders can use to appraise stocks. Some of the most underrated methods are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the elite fund managers can outpace their index-focused peers by a superb amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Blair Levinsky of Waratah Capital Advisors
Blair Levinsky of Waratah Capital Advisors

Blair Levinsky of Waratah Capital Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to take a look at the key hedge fund action surrounding Tetra Tech, Inc. (NASDAQ:TTEK).

Do Hedge Funds Think TTEK Is A Good Stock To Buy Now?

At Q1's end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards TTEK over the last 23 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, Value Holdings LP held the most valuable stake in Tetra Tech, Inc. (NASDAQ:TTEK), which was worth $35.1 million at the end of the fourth quarter. On the second spot was Sandler Capital Management which amassed $10.9 million worth of shares. Running Oak Capital, D E Shaw, and McKinley Capital Management 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 Value Holdings LP allocated the biggest weight to Tetra Tech, Inc. (NASDAQ:TTEK), around 7.99% of its 13F portfolio. Running Oak Capital is also relatively very bullish on the stock, dishing out 1.92 percent of its 13F equity portfolio to TTEK.

Due to the fact that Tetra Tech, Inc. (NASDAQ:TTEK) has faced declining sentiment from the smart money, it's easy to see that there were a few hedge funds who were dropping their positions entirely heading into Q2. It's worth mentioning that Principal Global Investors's Columbus Circle Investors dropped the biggest investment of the 750 funds monitored by Insider Monkey, worth about $0.9 million in stock, and Mika Toikka's AlphaCrest Capital Management was right behind this move, as the fund dumped about $0.8 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 6 funds heading into Q2.

Let's go over hedge fund activity in other stocks similar to Tetra Tech, Inc. (NASDAQ:TTEK). These stocks are Lincoln Electric Holdings, Inc. (NASDAQ:LECO), Donaldson Company, Inc. (NYSE:DCI), Hill-Rom Holdings, Inc. (NYSE:HRC), Advanced Drainage Systems Inc. (NYSE:WMS), BRP Inc. (NASDAQ:DOOO), Euronet Worldwide, Inc. (NASDAQ:EEFT), and Targa Resources Corp (NYSE:TRGP). This group of stocks' market caps are closest to TTEK's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LECO,19,283252,-1 DCI,28,279375,2 HRC,30,454507,2 WMS,29,1220549,4 DOOO,17,196834,2 EEFT,40,511517,8 TRGP,24,531977,-5 Average,26.7,496859,1.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.7 hedge funds with bullish positions and the average amount invested in these stocks was $497 million. That figure was $95 million in TTEK's case. Euronet Worldwide, Inc. (NASDAQ:EEFT) is the most popular stock in this table. On the other hand BRP Inc. (NASDAQ:DOOO) is the least popular one with only 17 bullish hedge fund positions. Tetra Tech, Inc. (NASDAQ:TTEK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TTEK is 35.8. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately TTEK wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TTEK investors were disappointed as the stock returned -8.6% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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