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Is TETRA Technologies, Inc. (TTI) A Good Stock To Buy?

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Abigail Fisher
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It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 18.7% so far in 2019 and outperformed the S&P 500 ETF by 6.6 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards TETRA Technologies, Inc. (NYSE:TTI) changed during the first quarter.

TETRA Technologies, Inc. (NYSE:TTI) has experienced a decrease in activity from the world's largest hedge funds recently. Our calculations also showed that TTI isn't among the 30 most popular stocks among hedge funds.

In the eyes of most traders, hedge funds are seen as slow, old financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open today, Our researchers choose to focus on the bigwigs of this group, around 750 funds. These investment experts watch over the lion's share of the smart money's total capital, and by keeping an eye on their best picks, Insider Monkey has unearthed many investment strategies that have historically outpaced the market. Insider Monkey's flagship hedge fund strategy outpaced the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% 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 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).

Joe Huber - Huber Capital Management
Joe Huber - Huber Capital Management

Let's take a gander at the key hedge fund action surrounding TETRA Technologies, Inc. (NYSE:TTI).

How have hedgies been trading TETRA Technologies, Inc. (NYSE:TTI)?

Heading into the second quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TTI over the last 15 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.

TTI_june2019
TTI_june2019

The largest stake in TETRA Technologies, Inc. (NYSE:TTI) was held by Prescott Group Capital Management, which reported holding $7.5 million worth of stock at the end of March. It was followed by D E Shaw with a $3.6 million position. Other investors bullish on the company included Alyeska Investment Group, Huber Capital Management, and Renaissance Technologies.

Since TETRA Technologies, Inc. (NYSE:TTI) has witnessed a decline in interest from hedge fund managers, we can see that there is a sect of fund managers that decided to sell off their entire stakes in the third quarter. It's worth mentioning that David Costen Haley's HBK Investments said goodbye to the biggest investment of the "upper crust" of funds monitored by Insider Monkey, valued at about $0.4 million in stock, and Cliff Asness's AQR Capital Management was right behind this move, as the fund said goodbye to about $0.1 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds in the third quarter.

Let's also examine hedge fund activity in other stocks similar to TETRA Technologies, Inc. (NYSE:TTI). These stocks are HF Foods Group Inc. (NASDAQ:HFFG), Protagonist Therapeutics, Inc. (NASDAQ:PTGX), eGain Corporation (NASDAQ:EGAN), and Biglari Holdings Inc (NYSE:BH). This group of stocks' market caps are similar to TTI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HFFG,2,1025,0 PTGX,15,103839,0 EGAN,14,46344,5 BH,9,37227,1 Average,10,47109,1.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $15 million in TTI's case. Protagonist Therapeutics, Inc. (NASDAQ:PTGX) is the most popular stock in this table. On the other hand HF Foods Group Inc. (NASDAQ:HFFG) is the least popular one with only 2 bullish hedge fund positions. TETRA Technologies, Inc. (NYSE:TTI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately TTI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TTI were disappointed as the stock returned -30.8% 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 so far in Q2.

Disclosure: None. This article was originally published at Insider Monkey.

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