Is Tilly's Inc (NYSE:TLYS) 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.
Tilly's Inc (NYSE:TLYS) has seen an increase in support from the world's most elite money managers lately. TLYS was in 16 hedge funds' portfolios at the end of the first quarter of 2019. There were 15 hedge funds in our database with TLYS holdings at the end of the previous quarter. Our calculations also showed that tlys isn't among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
[caption id="attachment_30621" align="aligncenter" width="487"] Cliff Asness of AQR Capital Management[/caption]
We're going to take a peek at the latest hedge fund action regarding Tilly's Inc (NYSE:TLYS).
What have hedge funds been doing with Tilly's Inc (NYSE:TLYS)?
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TLYS over the last 15 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Divisar Capital held the most valuable stake in Tilly's Inc (NYSE:TLYS), which was worth $15.4 million at the end of the first quarter. On the second spot was Renaissance Technologies which amassed $10.8 million worth of shares. Moreover, AQR Capital Management, Nantahala Capital Management, and Arrowstreet Capital were also bullish on Tilly's Inc (NYSE:TLYS), allocating a large percentage of their portfolios to this stock.
Now, key hedge funds were leading the bulls' herd. PEAK6 Capital Management, managed by Matthew Hulsizer, initiated the biggest call position in Tilly's Inc (NYSE:TLYS). PEAK6 Capital Management had $0.6 million invested in the company at the end of the quarter. Michael Platt and William Reeves's BlueCrest Capital Mgmt. also made a $0.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Joel Greenblatt's Gotham Asset Management and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Tilly's Inc (NYSE:TLYS) but similarly valued. These stocks are Citizens, Inc. (NYSE:CIA), Allied Motion Technologies, Inc. (NASDAQ:AMOT), Business First Bancshares, Inc. (NASDAQ:BFST), and Assertio Therapeutics, Inc. (NASDAQ:ASRT). This group of stocks' market caps are similar to TLYS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CIA,2,1384,0 AMOT,12,32307,0 BFST,1,16956,0 ASRT,14,46153,-2 Average,7.25,24200,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $64 million in TLYS's case. Assertio Therapeutics, Inc. (NASDAQ:ASRT) is the most popular stock in this table. On the other hand Business First Bancshares, Inc. (NASDAQ:BFST) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Tilly's Inc (NYSE:TLYS) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately TLYS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TLYS were disappointed as the stock returned -28.2% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.