Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility and underperformance. The time period between the end of June 2015 and the end of June 2016 was one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have been underperforming the large-cap indices. However, things have dramatically changed over the last 5 months. Small-cap stocks reversed their misfortune and beat the large cap indices by almost 11 percentage points since the end of June. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Trimble Inc (NASDAQ:TRMB) .
Is Trimble Inc (NASDAQ:TRMB) a bargain? Investors who are in the know are betting on the stock. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings inched up by 1 lately. TRMB was in 19 hedge funds’ portfolios at the end of September. There were 18 hedge funds in our database with TRMB holdings at the end of the previous quarter. At the end of this article we will also compare TRMB to other stocks including Kilroy Realty Corp (NYSE:KRC), iShares MSCI ACWI Index Fund (NASDAQ:ACWI), and TransUnion (NYSE:TRU) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Hedge fund activity in Trimble Inc (NASDAQ:TRMB)
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a gain of 6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TRMB over the last 5 quarters. So, let’s check out 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, Generation Investment Management, led by David Blood and Al Gore, holds the largest position in Trimble Inc (NASDAQ:TRMB). Generation Investment Management has a $125.9 million position in the stock, comprising 1.4% of its 13F portfolio. Sitting at the No. 2 spot is Robert Joseph Caruso of Select Equity Group, with a $122.6 million position; 1.1% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish consist of D. E. Shaw’s D E Shaw, Ian Simm’s Impax Asset Management and Clint Murray’s Lodge Hill Capital. We should note that two of these hedge funds (Impax Asset Management and Lodge Hill Capital) are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Now, specific money managers have jumped into Trimble Inc (NASDAQ:TRMB) headfirst. Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, created the most outsized position in Trimble Inc (NASDAQ:TRMB). Arrowstreet Capital had $15.3 million invested in the company at the end of the quarter. Mike Vranos’ Ellington also made a $1 million investment in the stock during the quarter. The other funds with brand new TRMB positions are Matthew Hulsizer’s PEAK6 Capital Management and Michael Platt and William Reeves’ BlueCrest Capital Mgmt.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Trimble Inc (NASDAQ:TRMB) but similarly valued. These stocks are Kilroy Realty Corp (NYSE:KRC), iShares MSCI ACWI Index Fund (NASDAQ:ACWI), TransUnion (NYSE:TRU), and Kinross Gold Corporation (USA) (NYSE:KGC). This group of stocks’ market caps match TRMB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KRC | 13 | 213436 | 4 |
| ACWI | 9 | 169259 | 3 |
| TRU | 28 | 533594 | 7 |
| KGC | 26 | 633503 | -5 |
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $387 million. That figure was $531 million in TRMB’s case. TransUnion (NYSE:TRU) is the most popular stock in this table. On the other hand iShares MSCI ACWI Index Fund (NASDAQ:ACWI) is the least popular one with only 9 bullish hedge fund positions. Trimble Inc (NASDAQ:TRMB) 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. In this regard TRU might be a better candidate to consider taking a long position in.
Disclosure: None
