Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors' consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETF by more than 6 percentage points so far this year. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at The TJX Companies, Inc. (NYSE:TJX) from the perspective of those elite funds.
To most stock holders, hedge funds are perceived as worthless, outdated financial tools of the past. While there are greater than 8000 funds in operation at present, Our experts look at the masters of this club, around 750 funds. Most estimates calculate that this group of people control most of all hedge funds' total capital, and by observing their inimitable picks, Insider Monkey has formulated various investment strategies that have historically outpaced the market. Insider Monkey's flagship hedge fund strategy outperformed the S&P 500 index by around 5 percentage points a year since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
Let's take a gander at the latest hedge fund action regarding The TJX Companies, Inc. (NYSE:TJX).
What does the smart money think about The TJX Companies, Inc. (NYSE:TJX)?
At Q1's end, a total of 54 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the fourth quarter of 2018. By comparison, 45 hedge funds held shares or bullish call options in TJX a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in The TJX Companies, Inc. (NYSE:TJX) was held by Arrowstreet Capital, which reported holding $659.1 million worth of stock at the end of March. It was followed by AQR Capital Management with a $381.8 million position. Other investors bullish on the company included Diamond Hill Capital, D E Shaw, and Two Sigma Advisors.
Seeing as The TJX Companies, Inc. (NYSE:TJX) has witnessed bearish sentiment from the aggregate hedge fund industry, it's safe to say that there were a few fund managers that elected to cut their full holdings by the end of the third quarter. Intriguingly, James Parsons's Junto Capital Management said goodbye to the biggest stake of the "upper crust" of funds watched by Insider Monkey, valued at about $68.9 million in stock. Michael Kharitonov and Jon David McAuliffe's fund, Voleon Capital, also dumped its stock, about $31.8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 4 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to The TJX Companies, Inc. (NYSE:TJX). These stocks are Duke Energy Corporation (NYSE:DUK), The Bank of Nova Scotia (NYSE:BNS), Canadian National Railway Company (NYSE:CNI), and Chubb Limited (NYSE:CB). All of these stocks' market caps are similar to TJX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DUK,26,1113817,9 BNS,14,518832,0 CNI,17,2175473,-7 CB,23,466816,-1 Average,20,1068735,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $1069 million. That figure was $3004 million in TJX's case. Duke Energy Corporation (NYSE:DUK) is the most popular stock in this table. On the other hand The Bank of Nova Scotia (NYSE:BNS) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks The TJX Companies, Inc. (NYSE:TJX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately TJX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TJX were disappointed as the stock returned -4.6% 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.