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After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards The Container Store Group Inc (NYSE:TCS).
Is TCS a good stock to buy now? Prominent investors were becoming more confident. The number of long hedge fund positions moved up by 5 recently. The Container Store Group Inc (NYSE:TCS) was in 14 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 18. Our calculations also showed that TCS isn't among the 30 most popular stocks among hedge funds (click for Q3 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 financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ian Wace of Marshall Wace
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now we're going to take a glance at the fresh hedge fund action encompassing The Container Store Group Inc (NYSE:TCS).
Do Hedge Funds Think TCS Is A Good Stock To Buy Now?
At the end of September, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 56% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards TCS over the last 21 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.
Among these funds, Leonard Green & Partners held the most valuable stake in The Container Store Group Inc (NYSE:TCS), which was worth $170.8 million at the end of the third quarter. On the second spot was Rutabaga Capital Management which amassed $4.6 million worth of shares. D E Shaw, Marshall Wace LLP, and Millennium 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 Leonard Green & Partners allocated the biggest weight to The Container Store Group Inc (NYSE:TCS), around 8.88% of its 13F portfolio. Rutabaga Capital Management is also relatively very bullish on the stock, earmarking 2.59 percent of its 13F equity portfolio to TCS.
As industrywide interest jumped, specific money managers were leading the bulls' herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the biggest position in The Container Store Group Inc (NYSE:TCS). Marshall Wace LLP had $1.1 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $1 million position during the quarter. The following funds were also among the new TCS investors: Renaissance Technologies, Michael Gelband's ExodusPoint Capital, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as The Container Store Group Inc (NYSE:TCS) but similarly valued. These stocks are Source Capital, Inc. (NYSE:SOR), Akoustis Technologies, Inc. (NASDAQ:AKTS), Heritage-Crystal Clean, Inc. (NASDAQ:HCCI), UFP Technologies, Inc. (NASDAQ:UFPT), Bar Harbor Bankshares (NYSE:BHB), Business First Bancshares, Inc. (NASDAQ:BFST), and DSP Group, Inc. (NASDAQ:DSPG). This group of stocks' market caps are similar to TCS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SOR,2,31699,-2 AKTS,6,12834,0 HCCI,11,37642,-1 UFPT,10,42285,3 BHB,2,4465,-1 BFST,3,9763,-2 DSPG,14,57122,-2 Average,6.9,27973,-0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.9 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $182 million in TCS's case. DSP Group, Inc. (NASDAQ:DSPG) is the most popular stock in this table. On the other hand Source Capital, Inc. (NYSE:SOR) is the least popular one with only 2 bullish hedge fund positions. The Container Store Group Inc (NYSE:TCS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TCS is 83.3. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on TCS as the stock returned 59.6% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.