While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding The Trade Desk, Inc. (NASDAQ:TTD) and see how the stock performed in comparison to hedge funds' consensus picks.
The Trade Desk, Inc. (NASDAQ:TTD) investors should pay attention to an increase in hedge fund interest lately. TTD was in 25 hedge funds' portfolios at the end of September. There were 24 hedge funds in our database with TTD positions at the end of the previous quarter. Our calculations also showed that TTD isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
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[caption id="attachment_365194" align="alignnone" width="600"] David E. Shaw of D.E. Shaw[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock is still extremely cheap despite already gaining 20 percent. With all of this in mind let's check out the fresh hedge fund action regarding The Trade Desk, Inc. (NASDAQ:TTD).
Hedge fund activity in The Trade Desk, Inc. (NASDAQ:TTD)
At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in TTD a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in The Trade Desk, Inc. (NASDAQ:TTD) was held by Alkeon Capital Management, which reported holding $187.6 million worth of stock at the end of September. It was followed by D E Shaw with a $154.7 million position. Other investors bullish on the company included Arrowstreet Capital, Whale Rock Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Ogborne Capital allocated the biggest weight to The Trade Desk, Inc. (NASDAQ:TTD), around 6.9% of its 13F portfolio. Tairen Capital is also relatively very bullish on the stock, designating 1.75 percent of its 13F equity portfolio to TTD.
As aggregate interest increased, specific money managers were leading the bulls' herd. Alkeon Capital Management, managed by Panayotis Takis Sparaggis, initiated the most valuable call position in The Trade Desk, Inc. (NASDAQ:TTD). Alkeon Capital Management had $187.6 million invested in the company at the end of the quarter. Benjamin A. Smith's Laurion Capital Management also made a $13.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Larry Chen and Terry Zhang's Tairen Capital, Doug Gordon, Jon Hilsabeck and Don Jabro's Shellback Capital, and Alexander Mitchell's Scopus Asset Management.
Let's now review hedge fund activity in other stocks similar to The Trade Desk, Inc. (NASDAQ:TTD). We will take a look at Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), Nordson Corporation (NASDAQ:NDSN), Aspen Technology, Inc. (NASDAQ:AZPN), and Westlake Chemical Corporation (NYSE:WLK). This group of stocks' market valuations are closest to TTD's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IONS,25,379230,7 NDSN,15,43658,-2 AZPN,28,1267011,2 WLK,18,352906,-5 Average,21.5,510701,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $511 million. That figure was $389 million in TTD's case. Aspen Technology, Inc. (NASDAQ:AZPN) is the most popular stock in this table. On the other hand Nordson Corporation (NASDAQ:NDSN) is the least popular one with only 15 bullish hedge fund positions. The Trade Desk, Inc. (NASDAQ:TTD) is not the most popular stock in this group but hedge fund interest is still above average. 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 10.1 percentage points. Hedge funds were also right about betting on TTD as the stock returned 123.8% in 2019 and outperformed the market. Hedge funds were rewarded for their relative bullishness. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.