Is TRIL Stock A Buy or Sell?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Trillium Therapeutics Inc. (NASDAQ:TRIL)? The smart money sentiment can provide an answer to this question.

Is TRIL stock a buy? Money managers were taking a bullish view. The number of bullish hedge fund positions moved up by 4 lately. Trillium Therapeutics Inc. (NASDAQ:TRIL) was in 36 hedge funds’ portfolios at the end of December. The all time high for this statistic is 32. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TRIL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 32 hedge funds in our database with TRIL positions at the end of the third quarter.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).

Peter Kolchinsky of RA Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s view the key hedge fund action surrounding Trillium Therapeutics Inc. (NASDAQ:TRIL).

Do Hedge Funds Think TRIL Is A Good Stock To Buy Now?

At the end of December, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TRIL over the last 22 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Behzad Aghazadeh’s Avoro Capital Advisors (venBio Select Advisor) has the biggest position in Trillium Therapeutics Inc. (NASDAQ:TRIL), worth close to $85.3 million, accounting for 1.5% of its total 13F portfolio. Sitting at the No. 2 spot is RA Capital Management, led by Peter Kolchinsky, holding a $77.8 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish consist of Ken Griffin’s Citadel Investment Group, Alan Frazier’s Frazier Healthcare Partners and OrbiMed Advisors. In terms of the portfolio weights assigned to each position Commodore Capital allocated the biggest weight to Trillium Therapeutics Inc. (NASDAQ:TRIL), around 6.82% of its 13F portfolio. Ghost Tree Capital is also relatively very bullish on the stock, setting aside 6.39 percent of its 13F equity portfolio to TRIL.

As one would reasonably expect, key money managers have been driving this bullishness. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, established the largest position in Trillium Therapeutics Inc. (NASDAQ:TRIL). Polar Capital had $22.5 million invested in the company at the end of the quarter. Egen Atkinson and Michael Kramarz’s Commodore Capital also made a $12.5 million investment in the stock during the quarter. The following funds were also among the new TRIL investors: Steve Cohen’s Point72 Asset Management, Principal Global Investors’s Columbus Circle Investors, and Prashanth Jayaram’s Tri Locum Partners.

Let’s now review hedge fund activity in other stocks similar to Trillium Therapeutics Inc. (NASDAQ:TRIL). These stocks are 3D Systems Corporation (NYSE:DDD), GMS Inc. (NYSE:GMS), Tennant Company (NYSE:TNC), Materion Corp (NYSE:MTRN), Malibu Boats Inc (NASDAQ:MBUU), Stewart Information Services Corp (NYSE:STC), and Weis Markets, Inc. (NYSE:WMK). This group of stocks’ market values are similar to TRIL’s market value.

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As you can see these stocks had an average of 14.7 hedge funds with bullish positions and the average amount invested in these stocks was $95 million. That figure was $534 million in TRIL’s case. Stewart Information Services Corp (NYSE:STC) is the most popular stock in this table. On the other hand Weis Markets, Inc. (NYSE:WMK) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Trillium Therapeutics Inc. (NASDAQ:TRIL) is more popular among hedge funds. Our overall hedge fund sentiment score for TRIL is 89. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Unfortunately TRIL wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on TRIL were disappointed as the stock returned -25.4% since the end of the fourth quarter (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.

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