Hedge Funds Are Selling TFS Financial Corporation (TFSL)
Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the fourth quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of TFS Financial Corporation (NASDAQ:TFSL) based on that data.
Is TFS Financial Corporation (NASDAQ:TFSL) the right pick for your portfolio? The best stock pickers were taking a pessimistic view. The number of long hedge fund bets fell by 4 recently. TFS Financial Corporation (NASDAQ:TFSL) was in 6 hedge funds' portfolios at the end of March. The all time high for this statistic is 15. Our calculations also showed that TFSL isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 10 hedge funds in our database with TFSL positions at the end of the fourth quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. 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. Now let's analyze the key hedge fund action encompassing TFS Financial Corporation (NASDAQ:TFSL).
Do Hedge Funds Think TFSL Is A Good Stock To Buy Now?
At the end of March, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -40% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in TFSL a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in TFS Financial Corporation (NASDAQ:TFSL), which was worth $109.5 million at the end of the fourth quarter. On the second spot was Empyrean Capital Partners which amassed $31.7 million worth of shares. Bridgewater Associates, Citadel Investment Group, and AQR 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 Empyrean Capital Partners allocated the biggest weight to TFS Financial Corporation (NASDAQ:TFSL), around 0.91% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.14 percent of its 13F equity portfolio to TFSL.
Seeing as TFS Financial Corporation (NASDAQ:TFSL) has witnessed falling interest from the aggregate hedge fund industry, we can see that there lies a certain "tier" of money managers who were dropping their positions entirely in the first quarter. Intriguingly, Israel Englander's Millennium Management dropped the largest stake of all the hedgies followed by Insider Monkey, worth close to $3.5 million in stock. David Harding's fund, Winton Capital Management, also dumped its stock, about $0.4 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 4 funds in the first quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as TFS Financial Corporation (NASDAQ:TFSL) but similarly valued. We will take a look at Lemonade, Inc. (NYSE:LMND), SunPower Corporation (NASDAQ:SPWR), Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI), National Instruments Corporation (NASDAQ:NATI), Eastgroup Properties Inc (NYSE:EGP), Unum Group (NYSE:UNM), and PLDT Inc. (NYSE:PHI). All of these stocks' market caps resemble TFSL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LMND,16,159616,3 SPWR,18,182419,-6 OLLI,24,194324,3 NATI,21,248825,3 EGP,13,82942,0 UNM,33,283684,8 PHI,4,86933,0 Average,18.4,176963,1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.4 hedge funds with bullish positions and the average amount invested in these stocks was $177 million. That figure was $146 million in TFSL's case. Unum Group (NYSE:UNM) is the most popular stock in this table. On the other hand PLDT Inc. (NYSE:PHI) is the least popular one with only 4 bullish hedge fund positions. TFS Financial Corporation (NASDAQ:TFSL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TFSL is 16.4. 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 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately TFSL wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TFSL investors were disappointed as the stock returned 3.2% since the end of March (through 6/25) 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.
