Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Twin Disc, Incorporated (NASDAQ:TWIN).
Twin Disc, Incorporated (NASDAQ:TWIN) has experienced a decrease in hedge fund interest recently. Our calculations also showed that TWIN 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 eyes of most shareholders, hedge funds are seen as slow, old financial tools of the past. While there are more than 8000 funds in operation at present, Our experts hone in on the top tier of this group, about 850 funds. It is estimated that this group of investors orchestrate most of all hedge funds' total asset base, and by paying attention to their highest performing investments, Insider Monkey has unsheathed a number of investment strategies that have historically outstripped the broader indices. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_193003" align="aligncenter" width="400"] Chuck Royce of Royce & Associates[/caption]
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. Keeping this in mind we're going to take a look at the latest hedge fund action encompassing Twin Disc, Incorporated (NASDAQ:TWIN).
What have hedge funds been doing with Twin Disc, Incorporated (NASDAQ:TWIN)?
Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards TWIN over the last 18 quarters. With the smart money's sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, GAMCO Investors was the largest shareholder of Twin Disc, Incorporated (NASDAQ:TWIN), with a stake worth $11.5 million reported as of the end of September. Trailing GAMCO Investors was Juniper Investment Company, which amassed a stake valued at $5.2 million. Renaissance Technologies, Ancora Advisors, and Royce & Associates 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 Juniper Investment Company allocated the biggest weight to Twin Disc, Incorporated (NASDAQ:TWIN), around 8.04% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, dishing out 0.14 percent of its 13F equity portfolio to TWIN.
Because Twin Disc, Incorporated (NASDAQ:TWIN) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain "tier" of funds that slashed their full holdings in the first quarter. At the top of the heap, Charles Paquelet's Skylands Capital cut the biggest stake of the "upper crust" of funds watched by Insider Monkey, comprising an estimated $0.9 million in stock. Gavin Saitowitz and Cisco J. del Valle's fund, Springbok Capital, also dropped its stock, about $0 million worth. These transactions are important to note, as total hedge fund interest was cut by 2 funds in the first quarter.
Let's check out hedge fund activity in other stocks similar to Twin Disc, Incorporated (NASDAQ:TWIN). These stocks are Clipper Realty Inc. (NYSE:CLPR), Landmark Bancorp, Inc. (NASDAQ:LARK), Gran Tierra Energy Inc. (NYSE:GTE), and LiveXLive Media, Inc. (NASDAQ:LIVX). This group of stocks' market values are closest to TWIN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CLPR,9,21816,1 LARK,3,3718,0 GTE,12,31824,-3 LIVX,3,5130,0 Average,6.75,15622,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $17 million in TWIN's case. Gran Tierra Energy Inc. (NYSE:GTE) is the most popular stock in this table. On the other hand Landmark Bancorp, Inc. (NASDAQ:LARK) is the least popular one with only 3 bullish hedge fund positions. Twin Disc, Incorporated (NASDAQ:TWIN) 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 TWIN wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); TWIN investors were disappointed as the stock returned -21.3% 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.
Disclosure: None. This article was originally published at Insider Monkey.