“The global economic environment is very favorable for investors. Economies are generally strong, but not too strong. Employment levels are among the strongest for many decades. Interest rates are paused at very low levels, and the risk of significant increases in the medium term seems low. Financing for transactions is freely available to good borrowers, but not in major excess. Covenants are lighter than they were five years ago, but the extreme excesses seen in the past do not seem prevalent yet today. Despite this apparent ‘goldilocks’ market environment, we continue to worry about a world where politics are polarized almost everywhere, interest rates are low globally, and equity valuations are at their peak,” are the words of Brookfield Asset Management. Brookfield was right about politics as stocks experienced their second worst May since the 1960s due to escalation of trade disputes. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards Triple-S Management Corporation (NYSE:GTS) and see how it was affected.
Is Triple-S Management Corporation (NYSE:GTS) a buy here? The smart money is betting on the stock. The number of bullish hedge fund bets rose by 5 lately. Our calculations also showed that GTS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). GTS was in 18 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with GTS positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Paul Marshall of Marshall Wace
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to go over the recent hedge fund action surrounding Triple-S Management Corporation (NYSE:GTS).
Hedge fund activity in Triple-S Management Corporation (NYSE:GTS)
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from the second quarter of 2019. On the other hand, there were a total of 13 hedge funds with a bullish position in GTS a year ago. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
The largest stake in Triple-S Management Corporation (NYSE:GTS) was held by Pzena Investment Management, which reported holding $25.8 million worth of stock at the end of September. It was followed by Lakewood Capital Management with a $24.1 million position. Other investors bullish on the company included D E Shaw, Marshall Wace, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Lakewood Capital Management allocated the biggest weight to Triple-S Management Corporation (NYSE:GTS), around 0.82% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, dishing out 0.15 percent of its 13F equity portfolio to GTS.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Paloma Partners, managed by Donald Sussman, assembled the largest position in Triple-S Management Corporation (NYSE:GTS). Paloma Partners had $0.4 million invested in the company at the end of the quarter. Mike Vranos’s Ellington also made a $0.3 million investment in the stock during the quarter. The other funds with brand new GTS positions are Michael Gelband’s ExodusPoint Capital, David Harding’s Winton Capital Management, and Andrew Weiss’s Weiss Asset Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Triple-S Management Corporation (NYSE:GTS) but similarly valued. We will take a look at Gladstone Capital Corporation (NASDAQ:GLAD), Cresud Sociedad Anonima Comercial, Inmobiliaria, Financiera y Agropecuaria (NASDAQ:CRESY), Ardelyx Inc (NASDAQ:ARDX), and Pacific Drilling SA (NYSE:PACD). This group of stocks’ market valuations match GTS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GLAD | 5 | 4387 | 0 |
| CRESY | 7 | 12859 | 0 |
| ARDX | 14 | 80602 | 2 |
| PACD | 9 | 211654 | 0 |
| Average | 8.75 | 77376 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $89 million in GTS’s case. Ardelyx Inc (NASDAQ:ARDX) is the most popular stock in this table. On the other hand Gladstone Capital Corporation (NASDAQ:GLAD) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Triple-S Management Corporation (NYSE:GTS) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on GTS as the stock returned 42.9% during the first two months of Q4 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.
Disclosure: None. This article was originally published at Insider Monkey.
