As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Triumph Bancorp Inc (NASDAQ:TBK).
Is Triumph Bancorp Inc (NASDAQ:TBK) a superb investment today? The best stock pickers were in a bullish mood. The number of bullish hedge fund positions advanced by 3 in recent months. Triumph Bancorp Inc (NASDAQ:TBK) was in 19 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 16. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TBK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 79 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.
Christian Leone of Luxor Capital Group
Keeping this in mind we’re going to take a peek at the recent hedge fund action encompassing Triumph Bancorp Inc (NASDAQ:TBK).
Do Hedge Funds Think TBK Is A Good Stock To Buy Now?
At second quarter’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TBK over the last 24 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, Luxor Capital Group held the most valuable stake in Triumph Bancorp Inc (NASDAQ:TBK), which was worth $125.6 million at the end of the second quarter. On the second spot was Royce & Associates which amassed $49.3 million worth of shares. Driehaus Capital, Forest Hill Capital, and Luxor Capital Group 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 Second Curve Capital allocated the biggest weight to Triumph Bancorp Inc (NASDAQ:TBK), around 4.52% of its 13F portfolio. Forest Hill Capital is also relatively very bullish on the stock, earmarking 3.09 percent of its 13F equity portfolio to TBK.
As one would reasonably expect, key hedge funds have been driving this bullishness. EJF Capital, managed by Emanuel J. Friedman, initiated the most valuable position in Triumph Bancorp Inc (NASDAQ:TBK). EJF Capital had $5 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $1.2 million investment in the stock during the quarter. The other funds with new positions in the stock are D. E. Shaw’s D E Shaw, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Noam Gottesman’s GLG Partners.
Let’s go over hedge fund activity in other stocks similar to Triumph Bancorp Inc (NASDAQ:TBK). We will take a look at Enerplus Corp (NYSE:ERF), View, Inc. (NASDAQ:VIEW), YPF Sociedad Anonima (NYSE:YPF), Monmouth Real Estate Investment Corp. (NYSE:MNR), PBF Energy Inc (NYSE:PBF), Castle Biosciences, Inc. (NASDAQ:CSTL), and Evolent Health Inc (NYSE:EVH). All of these stocks’ market caps match TBK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ERF | 18 | 197596 | -1 |
| VIEW | 12 | 33454 | -10 |
| YPF | 11 | 27884 | 3 |
| MNR | 18 | 91097 | 5 |
| PBF | 17 | 80941 | 4 |
| CSTL | 14 | 282011 | -3 |
| EVH | 24 | 376284 | 2 |
| Average | 16.3 | 155610 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.3 hedge funds with bullish positions and the average amount invested in these stocks was $156 million. That figure was $259 million in TBK’s case. Evolent Health Inc (NYSE:EVH) is the most popular stock in this table. On the other hand YPF Sociedad Anonima (NYSE:YPF) is the least popular one with only 11 bullish hedge fund positions. Triumph Bancorp Inc (NASDAQ:TBK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TBK is 68.8. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on TBK as the stock returned 56.1% since the end of Q2 (through 10/22) 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.
