Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 15 S&P 500 stocks among hedge funds at the end of September 2018 returned an average of 1% through March 15th whereas the S&P 500 Index ETF lost 2.2% during the same period. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Triton International Limited (NYSE:TRTN) from the perspective of those elite funds.
Triton International Limited (NYSE:TRTN) investors should be aware of a decrease in enthusiasm from smart money of late. Our calculations also showed that TRTN isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 32 percentage points since May 2014 through March 12, 2019 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Cliff Asness of AQR Capital Management
Let’s review the recent hedge fund action surrounding Triton International Limited (NYSE:TRTN).
How are hedge funds trading Triton International Limited (NYSE:TRTN)?
At Q4’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TRTN over the last 14 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Islet Management held the most valuable stake in Triton International Limited (NYSE:TRTN), which was worth $7.8 million at the end of the fourth quarter. On the second spot was Spindletop Capital which amassed $7.6 million worth of shares. Moreover, Segantii Capital, PEAK6 Capital Management, and AQR Capital Management were also bullish on Triton International Limited (NYSE:TRTN), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Triton International Limited (NYSE:TRTN) has witnessed declining sentiment from hedge fund managers, we can see that there was a specific group of fund managers that slashed their full holdings in the third quarter. It’s worth mentioning that Benjamin A. Smith’s Laurion Capital Management dropped the largest position of all the hedgies watched by Insider Monkey, comprising about $20.1 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also dropped its stock, about $12.6 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Triton International Limited (NYSE:TRTN) but similarly valued. These stocks are MakeMyTrip Limited (NASDAQ:MMYT), Murphy USA Inc. (NYSE:MUSA), Integer Holdings Corporation (NYSE:ITGR), and Stantec Inc. (NYSE:STN). All of these stocks’ market caps resemble TRTN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MMYT | 11 | 48024 | -1 |
| MUSA | 24 | 150043 | 5 |
| ITGR | 19 | 219474 | 2 |
| STN | 4 | 61347 | -1 |
| Average | 14.5 | 119722 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $120 million. That figure was $25 million in TRTN’s case. Murphy USA Inc. (NYSE:MUSA) is the most popular stock in this table. On the other hand Stantec Inc. (NYSE:STN) is the least popular one with only 4 bullish hedge fund positions. Triton International Limited (NYSE:TRTN) 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. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately TRTN wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); TRTN investors were disappointed as the stock returned 7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
