Did Hedge Funds Make The Right Call On TC Energy Corporation (TRP) ?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded TC Energy Corporation (NYSE:TRP) and determine whether the smart money was really smart about this stock.

Is TC Energy Corporation (NYSE:TRP) worth your attention right now? Money managers were getting more optimistic. The number of long hedge fund positions inched up by 2 in recent months. Our calculations also showed that TRP isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

According to most traders, hedge funds are assumed to be worthless, old investment vehicles of years past. While there are over 8000 funds trading at the moment, Our researchers look at the upper echelon of this group, approximately 850 funds. These money managers have their hands on bulk of the smart money’s total asset base, and by tracking their unrivaled equity investments, Insider Monkey has revealed a number of investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Noam Gottesman of GLG Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Now we’re going to take a peek at the latest hedge fund action surrounding TC Energy Corporation (NYSE:TRP).

How have hedgies been trading TC Energy Corporation (NYSE:TRP)?

At Q1’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. On the other hand, there were a total of 12 hedge funds with a bullish position in TRP a year ago. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

More specifically, D E Shaw was the largest shareholder of TC Energy Corporation (NYSE:TRP), with a stake worth $35.4 million reported as of the end of September. Trailing D E Shaw was Heathbridge Capital Management, which amassed a stake valued at $27.2 million. Marshall Wace LLP, Balyasny Asset Management, and Bridgewater Associates 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 Heathbridge Capital Management allocated the biggest weight to TC Energy Corporation (NYSE:TRP), around 7.3% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, earmarking 3.01 percent of its 13F equity portfolio to TRP.

As one would reasonably expect, key money managers have jumped into TC Energy Corporation (NYSE:TRP) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the largest position in TC Energy Corporation (NYSE:TRP). Marshall Wace LLP had $26.1 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $22.4 million investment in the stock during the quarter. The following funds were also among the new TRP investors: Brandon Haley’s Holocene Advisors, Noam Gottesman’s GLG Partners, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as TC Energy Corporation (NYSE:TRP) but similarly valued. These stocks are Humana Inc (NYSE:HUM), Truist Financial Corporation (NYSE:TFC), Relx PLC (NYSE:RELX), and Baxter International Inc. (NYSE:BAX). This group of stocks’ market caps are closest to TRP’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 39.75 hedge funds with bullish positions and the average amount invested in these stocks was $2026 million. That figure was $183 million in TRP’s case. Humana Inc (NYSE:HUM) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 5 bullish hedge fund positions. TC Energy Corporation (NYSE:TRP) 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately TRP wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); TRP investors were disappointed as the stock returned -1.9% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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