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The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Tucows Inc. (NASDAQ:TCX).
IsTCX a good stock to buy now? Money managers were reducing their bets on the stock. The number of bullish hedge fund bets retreated by 1 lately. Tucows Inc. (NASDAQ:TCX) was in 8 hedge funds' portfolios at the end of September. The all time high for this statistics is 12. Our calculations also showed that TCX 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. With all of this in mind let's take a peek at the key hedge fund action regarding Tucows Inc. (NASDAQ:TCX).
What have hedge funds been doing with Tucows Inc. (NASDAQ:TCX)?
Heading into the fourth quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the previous quarter. By comparison, 6 hedge funds held shares or bullish call options in TCX a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Blacksheep Fund Management was the largest shareholder of Tucows Inc. (NASDAQ:TCX), with a stake worth $30.8 million reported as of the end of September. Trailing Blacksheep Fund Management was Renaissance Technologies, which amassed a stake valued at $29.1 million. Arrowstreet Capital, Osmium Partners, and Citadel Investment Group 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 Osmium Partners allocated the biggest weight to Tucows Inc. (NASDAQ:TCX), around 11.97% of its 13F portfolio. Blacksheep Fund Management is also relatively very bullish on the stock, earmarking 9.88 percent of its 13F equity portfolio to TCX.
Since Tucows Inc. (NASDAQ:TCX) has witnessed a decline in interest from the entirety of the hedge funds we track, it's easy to see that there is a sect of hedge funds that decided to sell off their full holdings last quarter. At the top of the heap, Ken Griffin's Citadel Investment Group dropped the biggest investment of all the hedgies followed by Insider Monkey, totaling about $1.7 million in stock, and Paul Marshall and Ian Wace's Marshall Wace LLP was right behind this move, as the fund cut about $0.6 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Tucows Inc. (NASDAQ:TCX) but similarly valued. These stocks are Meridian Bioscience, Inc. (NASDAQ:VIVO), Armada Hoffler Properties Inc (NYSE:AHH), Vaxart, Inc. (NASDAQ:VXRT), OneSmart International Education Group Limited (NYSE:ONE), Provention Bio, Inc. (NASDAQ:PRVB), Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY), and XPEL Inc. (NASDAQ:XPEL). This group of stocks' market values are closest to TCX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VIVO,19,103498,-4 AHH,12,39523,0 VXRT,12,99934,5 ONE,20,169705,14 PRVB,10,83998,-4 PLAY,16,202166,4 XPEL,12,16036,8 Average,14.4,102123,3.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.4 hedge funds with bullish positions and the average amount invested in these stocks was $102 million. That figure was $74 million in TCX's case. OneSmart International Education Group Limited (NYSE:ONE) is the most popular stock in this table. On the other hand Provention Bio, Inc. (NASDAQ:PRVB) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Tucows Inc. (NASDAQ:TCX) is even less popular than PRVB. Our overall hedge fund sentiment score for TCX is 24. 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. Hedge funds dodged a bullet by taking a bearish stance towards TCX. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd but managed to beat the market again by 16 percentage points. Unfortunately TCX wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); TCX investors were disappointed as the stock returned 5.3% since the end of the third quarter (through 12/2) 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 most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.