Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Trillium Therapeutics Inc. (NASDAQ:TRIL) based on that data and determine whether they were really smart about the stock.
Hedge fund interest in Trillium Therapeutics Inc. (NASDAQ:TRIL) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that TRIL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Delek Logistics Partners LP (NYSE:DKL), Foundation Building Materials, Inc. (NYSE:FBM), and Codexis, Inc. (NASDAQ:CDXS) to gather more data points. Our calculations also showed that TRIL isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Jim Simons of Renaissance Technologies
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. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Keeping this in mind we’re going to check out the key hedge fund action encompassing Trillium Therapeutics Inc. (NASDAQ:TRIL).
How have hedgies been trading Trillium Therapeutics Inc. (NASDAQ:TRIL)?
At Q2’s end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards TRIL over the last 20 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Peter Kolchinsky’s RA Capital Management has the most valuable position in Trillium Therapeutics Inc. (NASDAQ:TRIL), worth close to $49.9 million, amounting to 1% of its total 13F portfolio. The second largest stake is held by Avoro Capital Advisors (venBio Select Advisor), managed by Behzad Aghazadeh, which holds a $38.4 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Other peers that are bullish encompass Ken Griffin’s Citadel Investment Group, Alan Frazier’s Frazier Healthcare Partners and Ken Greenberg and David Kim’s Ghost Tree Capital. In terms of the portfolio weights assigned to each position Ghost Tree Capital allocated the biggest weight to Trillium Therapeutics Inc. (NASDAQ:TRIL), around 3.25% of its 13F portfolio. Frazier Healthcare Partners is also relatively very bullish on the stock, setting aside 1.96 percent of its 13F equity portfolio to TRIL.
Seeing as Trillium Therapeutics Inc. (NASDAQ:TRIL) has experienced falling interest from the smart money, it’s safe to say that there were a few fund managers who sold off their positions entirely heading into Q3. At the top of the heap, Albert Cha and Frank Kung’s Vivo Capital said goodbye to the biggest stake of all the hedgies watched by Insider Monkey, worth about $8.3 million in stock. Arsani William’s fund, Logos Capital, also cut its stock, about $4 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Trillium Therapeutics Inc. (NASDAQ:TRIL) but similarly valued. We will take a look at Delek Logistics Partners LP (NYSE:DKL), Foundation Building Materials, Inc. (NYSE:FBM), Codexis, Inc. (NASDAQ:CDXS), Kosmos Energy Ltd (NYSE:KOS), ACCO Brands Corporation (NYSE:ACCO), Unitil Corporation (NYSE:UTL), and ArcBest Corp (NASDAQ:ARCB). This group of stocks’ market caps match TRIL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DKL | 1 | 2414 | 0 |
| FBM | 9 | 71737 | -3 |
| CDXS | 13 | 152342 | 5 |
| KOS | 12 | 33395 | -9 |
| ACCO | 12 | 26046 | -6 |
| UTL | 9 | 51639 | 0 |
| ARCB | 12 | 51186 | 1 |
| Average | 9.7 | 55537 | -1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.7 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $216 million in TRIL’s case. Codexis, Inc. (NASDAQ:CDXS) is the most popular stock in this table. On the other hand Delek Logistics Partners LP (NYSE:DKL) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Trillium Therapeutics Inc. (NASDAQ:TRIL) is more popular among hedge funds. Our overall hedge fund sentiment score for TRIL is 85. 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 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 returned 21.3% in 2020 through September 25th but still managed to beat the market by 17.7 percentage points. Hedge funds were also right about betting on TRIL as the stock returned 69% since the end of June 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.
