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 Tetra Tech, Inc. (NASDAQ:TTEK).
Tetra Tech, Inc. (NASDAQ:TTEK) investors should pay attention to a decrease in hedge fund sentiment lately. Our calculations also showed that TTEK isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). 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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_69704" align="aligncenter" width="450"] Andrew Sandler of Sandler Capital Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to analyze the new hedge fund action regarding Tetra Tech, Inc. (NASDAQ:TTEK).
Hedge fund activity in Tetra Tech, Inc. (NASDAQ:TTEK)
At Q3's end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in TTEK 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.
More specifically, AQR Capital Management was the largest shareholder of Tetra Tech, Inc. (NASDAQ:TTEK), with a stake worth $18.1 million reported as of the end of September. Trailing AQR Capital Management was GLG Partners, which amassed a stake valued at $17.8 million. Columbus Circle Investors, Sandler Capital Management, and Waratah Capital Advisors 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 Sandler Capital Management allocated the biggest weight to Tetra Tech, Inc. (NASDAQ:TTEK), around 1.17% of its 13F portfolio. Waratah Capital Advisors is also relatively very bullish on the stock, earmarking 1.1 percent of its 13F equity portfolio to TTEK.
Because Tetra Tech, Inc. (NASDAQ:TTEK) has experienced a decline in interest from the smart money, it's easy to see that there exists a select few funds who sold off their full holdings heading into Q4. Interestingly, Ken Grossman and Glen Schneider's SG Capital Management said goodbye to the biggest stake of all the hedgies tracked by Insider Monkey, worth close to $10.7 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace, also said goodbye to its stock, about $4.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 1 funds heading into Q4.
Let's go over hedge fund activity in other stocks similar to Tetra Tech, Inc. (NASDAQ:TTEK). These stocks are The New York Times Company (NYSE:NYT), Nexstar Media Group, Inc. (NASDAQ:NXST), Armstrong World Industries, Inc. (NYSE:AWI), and Eastgroup Properties Inc (NYSE:EGP). All of these stocks' market caps match TTEK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NYT,37,1186018,-4 NXST,34,1329838,-6 AWI,29,505278,-1 EGP,10,24396,-2 Average,27.5,761383,-3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.5 hedge funds with bullish positions and the average amount invested in these stocks was $761 million. That figure was $124 million in TTEK's case. The New York Times Company (NYSE:NYT) is the most popular stock in this table. On the other hand Eastgroup Properties Inc (NYSE:EGP) is the least popular one with only 10 bullish hedge fund positions. Tetra Tech, Inc. (NASDAQ:TTEK) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately TTEK wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TTEK investors were disappointed as the stock returned 1.8% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.