It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 18.7% so far in 2019 and outperformed the S&P 500 ETF by 6.6 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards TrustCo Bank Corp NY (NASDAQ:TRST) changed during the first quarter.
TrustCo Bank Corp NY (NASDAQ:TRST) has experienced an increase in activity from the world’s largest hedge funds in recent months. Our calculations also showed that TRST 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 40 percentage points since May 2014 through May 30, 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.
We’re going to take a peek at the latest hedge fund action surrounding TrustCo Bank Corp NY (NASDAQ:TRST).
What does smart money think about TrustCo Bank Corp NY (NASDAQ:TRST)?
At Q1’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TRST over the last 15 quarters. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the number one position in TrustCo Bank Corp NY (NASDAQ:TRST). Royce & Associates has a $22.6 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Jim Simons of Renaissance Technologies, with a $12.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism contain Israel Englander’s Millennium Management, Cliff Asness’s AQR Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
As aggregate interest increased, key money managers have been driving this bullishness. Laurion Capital Management, managed by Benjamin A. Smith, created the biggest position in TrustCo Bank Corp NY (NASDAQ:TRST). Laurion Capital Management had $0.1 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as TrustCo Bank Corp NY (NASDAQ:TRST) but similarly valued. We will take a look at Ameresco Inc (NYSE:AMRC), Oritani Financial Corp. (NASDAQ:ORIT), Meridian Bioscience, Inc. (NASDAQ:VIVO), and Wabash National Corporation (NYSE:WNC). This group of stocks’ market valuations are closest to TRST’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMRC | 10 | 30678 | 3 |
| ORIT | 7 | 36842 | -1 |
| VIVO | 16 | 83869 | -2 |
| WNC | 16 | 67949 | -4 |
| Average | 12.25 | 54835 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $47 million in TRST’s case. Meridian Bioscience, Inc. (NASDAQ:VIVO) is the most popular stock in this table. On the other hand Oritani Financial Corp. (NASDAQ:ORIT) is the least popular one with only 7 bullish hedge fund positions. TrustCo Bank Corp NY (NASDAQ:TRST) 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately TRST wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TRST investors were disappointed as the stock returned -2.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
