World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients' money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It's not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It's also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Is Talend S.A. (NASDAQ:TLND) a buy, sell, or hold? Prominent investors are becoming less hopeful. The number of bullish hedge fund positions went down by 8 lately. Our calculations also showed that TLND isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, 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. We're going to analyze the new hedge fund action encompassing Talend S.A. (NASDAQ:TLND).
How have hedgies been trading Talend S.A. (NASDAQ:TLND)?
At Q2's end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TLND over the last 16 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.
More specifically, Praesidium Investment Management Company was the largest shareholder of Talend S.A. (NASDAQ:TLND), with a stake worth $68.3 million reported as of the end of March. Trailing Praesidium Investment Management Company was Southpoint Capital Advisors, which amassed a stake valued at $50.2 million. Dorsal Capital Management, Sunriver Management, and Park West Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Talend S.A. (NASDAQ:TLND) has experienced bearish sentiment from hedge fund managers, it's easy to see that there exists a select few hedge funds who sold off their entire stakes by the end of the second quarter. Intriguingly, Derek C. Schrier's Indaba Capital Management dropped the biggest investment of the 750 funds followed by Insider Monkey, valued at an estimated $13.9 million in stock. Zachary Miller's fund, Parian Global Management, also said goodbye to its stock, about $13.2 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 8 funds by the end of the second quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Talend S.A. (NASDAQ:TLND) but similarly valued. These stocks are Alamo Group, Inc. (NYSE:ALG), Knoll Inc (NYSE:KNL), GasLog Ltd (NYSE:GLOG), and Triumph Group Inc (NYSE:TGI). All of these stocks' market caps resemble TLND's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALG,7,185807,-3 KNL,16,66709,-3 GLOG,13,47609,2 TGI,12,62143,0 Average,12,90567,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $91 million. That figure was $367 million in TLND's case. Knoll Inc (NYSE:KNL) is the most popular stock in this table. On the other hand Alamo Group, Inc. (NYSE:ALG) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Talend S.A. (NASDAQ:TLND) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately TLND wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TLND were disappointed as the stock returned -11.9% 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 in Q3.
Disclosure: None. This article was originally published at Insider Monkey.