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At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not TETRA Technologies, Inc. (NYSE:TTI) makes for a good investment right now.
Is TTI a good stock to buy now? TETRA Technologies, Inc. (NYSE:TTI) was in 12 hedge funds' portfolios at the end of September. The all time high for this statistics is 23. TTI has seen a decrease in support from the world's most elite money managers lately. There were 13 hedge funds in our database with TTI positions at the end of the second quarter. Our calculations also showed that TTI 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.
Joe Huber of Huber Capital Management
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. Keeping this in mind let's check out the recent hedge fund action encompassing TETRA Technologies, Inc. (NYSE:TTI).
Do Hedge Funds Think TTI Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TTI over the last 21 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Among these funds, Roumell Asset Management held the most valuable stake in TETRA Technologies, Inc. (NYSE:TTI), which was worth $5.9 million at the end of the third quarter. On the second spot was Prescott Group Capital Management which amassed $1.4 million worth of shares. Arrowstreet Capital, Millennium Management, and Huber Capital 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 Roumell Asset Management allocated the biggest weight to TETRA Technologies, Inc. (NYSE:TTI), around 11.62% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, dishing out 0.63 percent of its 13F equity portfolio to TTI.
Since TETRA Technologies, Inc. (NYSE:TTI) has experienced bearish sentiment from the smart money, logic holds that there lies a certain "tier" of hedgies who were dropping their full holdings in the third quarter. Intriguingly, Bradley Louis Radoff's Fondren Management dumped the biggest investment of the 750 funds tracked by Insider Monkey, comprising an estimated $0.6 million in stock. Michael Gelband's fund, ExodusPoint Capital, also dropped its stock, about $0.5 million worth. These moves are important to note, as total hedge fund interest dropped by 1 funds in the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as TETRA Technologies, Inc. (NYSE:TTI) but similarly valued. We will take a look at Cortland Bancorp (NASDAQ:CLDB), HMN Financial, Inc. (NASDAQ:HMNF), Vince Holding Corp (NYSE:VNCE), Network-1 Technologies Inc (NYSE:NTIP), Cocrystal Pharma, Inc. (NASDAQ:COCP), Blueknight Energy Partners L.P. (NASDAQ:BKEP), and Aridis Pharmaceuticals Inc. (NASDAQ:ARDS). All of these stocks' market caps are closest to TTI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CLDB,2,6881,1 HMNF,3,11876,-1 VNCE,2,1582,-3 NTIP,2,3810,0 COCP,4,8747,3 BKEP,3,5649,1 ARDS,1,80,0 Average,2.4,5518,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.4 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $11 million in TTI's case. Cocrystal Pharma, Inc. (NASDAQ:COCP) is the most popular stock in this table. On the other hand Aridis Pharmaceuticals Inc. (NASDAQ:ARDS) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks TETRA Technologies, Inc. (NYSE:TTI) is more popular among hedge funds. Our overall hedge fund sentiment score for TTI is 69.7. 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 returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on TTI as the stock returned 72.5% since the end of September (through 12/8) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.