Twin Disc, Incorporated (TWIN) Fell Out Of Favor With Hedge Funds?

·5 min read

In this article we will take a look at whether hedge funds think Twin Disc, Incorporated (NASDAQ:TWIN) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Twin Disc, Incorporated (NASDAQ:TWIN) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds' portfolios at the end of the first quarter of 2021. Our calculations also showed that TWIN isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare TWIN to other stocks including Partners Bancorp (NASDAQ:PTRS), MMA Capital Holdings Inc. (NASDAQ:MMAC), and Code Chain New Continent Limited (NASDAQ:CCNC) to get a better sense of its popularity.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Mario Gabelli of GAMCO Investors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we're going to take a look at the latest hedge fund action encompassing Twin Disc, Incorporated (NASDAQ:TWIN).

Do Hedge Funds Think TWIN Is A Good Stock To Buy Now?

At the end of March, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TWIN over the last 23 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

According to Insider Monkey's hedge fund database, Mario Gabelli's GAMCO Investors has the largest position in Twin Disc, Incorporated (NASDAQ:TWIN), worth close to $13.8 million, comprising 0.1% of its total 13F portfolio. Coming in second is Alexis Michas and John Bartholdson of Juniper Investment Company, with a $9.8 million position; the fund has 7% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish comprise Renaissance Technologies, Charles Paquelet's Skylands Capital and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Juniper Investment Company allocated the biggest weight to Twin Disc, Incorporated (NASDAQ:TWIN), around 7% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, dishing out 0.12 percent of its 13F equity portfolio to TWIN.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.

Let's go over hedge fund activity in other stocks similar to Twin Disc, Incorporated (NASDAQ:TWIN). We will take a look at Partners Bancorp (NASDAQ:PTRS), MMA Capital Holdings Inc. (NASDAQ:MMAC), Code Chain New Continent Limited (NASDAQ:CCNC), Aileron Therapeutics, Inc. (NASDAQ:ALRN), Exela Technologies, Inc. (NASDAQ:XELA), Boxlight Corporation (NASDAQ:BOXL), and SELLAS Life Sciences Group, Inc. (NASDAQ:SLS). All of these stocks' market caps are similar to TWIN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PTRS,2,993,1 MMAC,4,8482,-1 CCNC,3,657,3 ALRN,6,13846,5 XELA,8,10142,4 BOXL,3,664,-1 SLS,4,953,3 Average,4.3,5105,2 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.3 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $26 million in TWIN's case. Exela Technologies, Inc. (NASDAQ:XELA) is the most popular stock in this table. On the other hand Partners Bancorp (NASDAQ:PTRS) is the least popular one with only 2 bullish hedge fund positions. Twin Disc, Incorporated (NASDAQ:TWIN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TWIN is 45. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Hedge funds were also right about betting on TWIN as the stock returned 34.1% since the end of Q1 (through 6/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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