It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Terreno Realty Corporation (NYSE:TRNO).
Hedge fund interest towards Terreno Realty Corporation (NYSE:TRNO) shares was flat at the end of last quarter. This is usually a negative indicator. 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 AVG Technologies NV (NYSE:AVG), M.D.C. Holdings, Inc. (NYSE:MDC), and Oclaro, Inc. (NASDAQ:OCLR) to gather more data points.
Follow Terreno Realty Corp (NYSE:TRNO)
Follow Terreno Realty Corp (NYSE:TRNO)
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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With all of this in mind, let’s go over the fresh action surrounding Terreno Realty Corporation (NYSE:TRNO).
What does the smart money think about Terreno Realty Corporation (NYSE:TRNO)?
At the end of the third quarter, nine funds tracked by Insider Monkey held long positions in this stock, unchanged over the quarter. Below, you can check out the change in hedge fund sentiment towards TRNO 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.
When looking at the institutional investors followed by Insider Monkey, Millennium Management, one of the biggest hedge funds in the world, holds the largest position in Terreno Realty Corporation (NYSE:TRNO). Millennium Management has a $10.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is D. E. Shaw of D E Shaw, with a $2.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers that hold long positions include Ken Griffin’s Citadel Investment Group, Richard Driehaus’s Driehaus Capital and Cliff Asness’s AQR Capital Management. We should note that none of these hedge funds are 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.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Springbok Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Arrowstreet Capital).
Let’s check out hedge fund activity in other stocks similar to Terreno Realty Corporation (NYSE:TRNO). We will take a look at AVG Technologies NV (NYSE:AVG), M.D.C. Holdings, Inc. (NYSE:MDC), Oclaro, Inc. (NASDAQ:OCLR), and Cubic Corporation (NYSE:CUB). This group of stocks’ market caps match TRNO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AVG | 14 | 64320 | -4 |
| MDC | 11 | 62421 | -1 |
| OCLR | 41 | 247621 | 12 |
| CUB | 17 | 113374 | 2 |
As you can see these stocks had an average of 21 funds with bullish positions and the average amount invested in these stocks was $122 million. That figure was $22 million in TRNO’s case. Oclaro, Inc. (NASDAQ:OCLR) is the most popular stock in this table. On the other hand M.D.C. Holdings, Inc. (NYSE:MDC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Terreno Realty Corporation (NYSE:TRNO) is even less popular than MDC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: none
