Looking for stocks with high upside potential? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 5.7% in the 12 months ending October 26 (including dividend payments). Conversely, hedge funds’ 30 preferred S&P 500 stocks (as of June 2014) generated a return of 15.1% during the same 12-month period, with 53% of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Terreno Realty Corporation (NYSE:TRNO).
Terreno Realty Corporation (NYSE:TRNO) was in 12 hedge funds’ portfolios at the end of the third quarter of 2018. TRNO has seen an increase in enthusiasm from smart money recently. There were 9 hedge funds in our database with TRNO holdings at the end of the previous quarter. Our calculations also showed that trno isn’t among the 30 most popular stocks among hedge funds.
Today there are a lot of metrics investors can use to size up their stock investments. A duo of the most innovative metrics are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the elite fund managers can trounce their index-focused peers by a very impressive margin (see the details here).
Let’s take a look at the fresh hedge fund action encompassing Terreno Realty Corporation (NYSE:TRNO).
Hedge fund activity in Terreno Realty Corporation (NYSE:TRNO)
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the previous quarter. By comparison, 11 hedge funds held shares or bullish call options in TRNO heading into this year. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Among these funds, Marshall Wace LLP held the most valuable stake in Terreno Realty Corporation (NYSE:TRNO), which was worth $17.8 million at the end of the third quarter. On the second spot was Millennium Management which amassed $13.8 million worth of shares. Moreover, Impax Asset Management, Citadel Investment Group, and Renaissance Technologies were also bullish on Terreno Realty Corporation (NYSE:TRNO), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, some big names were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the most outsized position in Terreno Realty Corporation (NYSE:TRNO). Marshall Wace LLP had $17.8 million invested in the company at the end of the quarter. Ian Simm’s Impax Asset Management also made a $9.5 million investment in the stock during the quarter. The other funds with brand new TRNO positions are David Costen Haley’s HBK Investments and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Terreno Realty Corporation (NYSE:TRNO) but similarly valued. We will take a look at Cadence Bancorporation (NYSE:CADE), QTS Realty Trust Inc (NYSE:QTS), Universal Forest Products, Inc. (NASDAQ:UFPI), and Ameris Bancorp (NASDAQ:ABCB). This group of stocks’ market valuations are similar to TRNO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CADE | 19 | 323041 | 3 |
| QTS | 19 | 393861 | 6 |
| UFPI | 18 | 79274 | 1 |
| ABCB | 13 | 192698 | 3 |
| Average | 17.25 | 247219 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $247 million. That figure was $63 million in TRNO’s case. Cadence Bancorporation (NYSE:CADE) is the most popular stock in this table. On the other hand Ameris Bancorp (NASDAQ:ABCB) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Terreno Realty Corporation (NYSE:TRNO) is even less popular than ABCB. 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. This article was originally published at Insider Monkey.
