It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Trina Solar Limited (ADR) (NYSE:TSL) .
Trina Solar Limited (ADR) (NYSE:TSL) has experienced an increase in support from the world’s most successful money managers of late. 18 hedge funds owned the stock on September 30. There were 15 hedge funds in our database with TSL positions at the end of the previous quarter. 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 Eldorado Resorts Inc (NASDAQ:ERI), The Gorman-Rupp Company (NYSEAMEX:GRC), and PHH Corporation (NYSE:PHH) to gather more data points.
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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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How are hedge funds trading Trina Solar Limited (ADR) (NYSE:TSL)?
Heading into the fourth quarter of 2016, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a rise of 20% from the second quarter of 2016, as hedgie ownership has soared by 50% over the past 2 quarters to hit a yearly high. The graph below displays the number of hedge funds with bullish position in TSL over the last 5 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 publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Kerr Neilson’s Platinum Asset Management has the number one position in Trina Solar Limited (ADR) (NYSE:TSL), worth close to $56.5 million, corresponding to 1.3% of its total 13F portfolio. Sitting at the No. 2 spot is Ian Simm of Impax Asset Management, with a $30.4 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions comprise Robert Emil Zoellner’s Alpine Associates, Howard Marks’ Oaktree Capital Management, and Kenneth Tropin’s Graham Capital Management. We should note that Impax Asset Management is 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.
As industry-wide interest jumped, key hedge funds have jumped into Trina Solar Limited (ADR) (NYSE:TSL) headfirst. Alpine Associates created the largest position in Trina Solar Limited (ADR) (NYSE:TSL). Alpine Associates had $29.1 million invested in the company at the end of the quarter. Nick Niell’s Arrowgrass Capital Partners also initiated a $13.8 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Steve Cohen’s Point72 Asset Management, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s check out hedge fund activity in other stocks similar to Trina Solar Limited (ADR) (NYSE:TSL). These stocks are Eldorado Resorts Inc (NASDAQ:ERI), The Gorman-Rupp Company (NYSEAMEX:GRC), PHH Corporation (NYSE:PHH), and Cardinal Financial Corporation (NASDAQ:CFNL). All of these stocks’ market caps match TSL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ERI | 22 | 207294 | 0 |
| GRC | 5 | 35062 | -1 |
| PHH | 20 | 271332 | 3 |
| CFNL | 11 | 70084 | 2 |
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $146 million. That figure was $207 million in TSL’s case. Eldorado Resorts Inc (NASDAQ:ERI) is the most popular stock in this table. On the other hand The Gorman-Rupp Company (NYSEAMEX:GRC) is the least popular one with only 5 bullish hedge fund positions. Trina Solar Limited (ADR) (NYSE:TSL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ERI might be a better candidate to consider taking a long position in, though TSL is one to watch with its rising smart money ownership.
Disclosure: None
