In this article we will check out the progression of hedge fund sentiment towards Tremont Mortgage Trust (NASDAQ:TRMT) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is TRMT a good stock to buy? Tremont Mortgage Trust (NASDAQ:TRMT) investors should be aware of an increase in enthusiasm from smart money recently. Tremont Mortgage Trust (NASDAQ:TRMT) was in 3 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 3. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 2 hedge funds in our database with TRMT holdings at the end of December. Our calculations also showed that TRMT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Do Hedge Funds Think TRMT Is A Good Stock To Buy Now?
At first quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TRMT over the last 23 quarters. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Tremont Mortgage Trust (NASDAQ:TRMT), with a stake worth $1 million reported as of the end of March. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $0.2 million. Citadel Investment Group was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Tremont Mortgage Trust (NASDAQ:TRMT), around 0.0013% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, setting aside 0.0001 percent of its 13F equity portfolio to TRMT.
As aggregate interest increased, key money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, assembled the most valuable position in Tremont Mortgage Trust (NASDAQ:TRMT). Millennium Management had $0.2 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.1 million investment in the stock during the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Tremont Mortgage Trust (NASDAQ:TRMT) but similarly valued. We will take a look at Broadway Financial Corporation (NASDAQ:BYFC), Comstock Holding Companies, Inc. (NASDAQ:CHCI), China Jo Jo Drugstores Inc (NASDAQ:CJJD), Air Industries Group (NYSE:AIRI), Elmira Savings Bank (NASDAQ:ESBK), Pintec Technology Holdings Limited (NASDAQ:PT), and Forward Pharma A/S (NASDAQ:FWP). This group of stocks’ market caps resemble TRMT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BYFC | 3 | 1142 | -1 |
| CHCI | 2 | 2312 | -1 |
| CJJD | 6 | 7692 | 1 |
| AIRI | 1 | 69 | -1 |
| ESBK | 1 | 166 | 0 |
| PT | 2 | 141 | -1 |
| FWP | 3 | 4963 | 1 |
| Average | 2.6 | 2355 | -0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.6 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $1 million in TRMT’s case. China Jo Jo Drugstores Inc (NASDAQ:CJJD) is the most popular stock in this table. On the other hand Air Industries Group (NYSE:AIRI) is the least popular one with only 1 bullish hedge fund positions. Tremont Mortgage Trust (NASDAQ:TRMT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TRMT is 56. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately TRMT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TRMT were disappointed as the stock returned 5.9% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.