Here is What Hedge Funds Think About Tejon Ranch Company (TRC)

Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Tejon Ranch Company (NYSE:TRC).

Tejon Ranch Company (NYSE:TRC) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 7 hedge funds’ portfolios at the end of the third quarter of 2016. At the end of this article we will also compare TRC to other stocks including Cynapsus Therapeutics Inc (NASDAQ:CYNA), Flamel Technologies S.A. (ADR) (NASDAQ:FLML), and Shoe Carnival, Inc. (NASDAQ:SCVL) to get a better sense of its popularity.

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Now, we’re going to go over the fresh action regarding Tejon Ranch Company (NYSE:TRC).

How are hedge funds trading Tejon Ranch Company (NYSE:TRC)?

At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards TRC over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Martin Whitman’s Third Avenue Management has the biggest position in Tejon Ranch Company (NYSE:TRC), worth close to $54.7 million, accounting for 2.5% of its total 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, led by Chuck Royce, holding a $37.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions contain Michael Price’s MFP Investors, Mario Gabelli’s GAMCO Investors and John A. Levin’s Levin Capital Strategies. We should note that MFP Investors 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.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s check out hedge fund activity in other stocks similar to Tejon Ranch Company (NYSE:TRC). We will take a look at Cynapsus Therapeutics Inc (NASDAQ:CYNA), Flamel Technologies S.A. (ADR) (NASDAQ:FLML), Shoe Carnival, Inc. (NASDAQ:SCVL), and Western Asset Emerging Mrkts Dbt Fnd Inc (NYSE:ESD). This group of stocks’ market valuations match TRC’s market valuation.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $126 million in TRC’s case. Cynapsus Therapeutics Inc (NASDAQ:CYNA) is the most popular stock in this table. On the other hand Western Asset Emerging Mrkts Dbt Fnd Inc (NYSE:ESD) is the least popular one with only 5 bullish hedge fund positions. Tejon Ranch Company (NYSE:TRC) 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 CYNA might be a better candidate to consider taking a long position in.

Disclosure: none.