At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Tiger Global because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
TriMas Corp (NASDAQ:TRS) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 16 hedge funds’ portfolios at the end of the fourth quarter of 2018. 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 Redwood Trust, Inc. (NYSE:RWT), YETI Holdings, Inc. (NYSE:YETI), and EnPro Industries, Inc. (NYSE:NPO) to gather more data points.
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 market by 32 percentage points since May 2014 through March 12, 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.
Let’s view the fresh hedge fund action encompassing TriMas Corp (NASDAQ:TRS).
What have hedge funds been doing with TriMas Corp (NASDAQ:TRS)?
At the end of the fourth quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards TRS over the last 14 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Pzena Investment Management held the most valuable stake in TriMas Corp (NASDAQ:TRS), which was worth $51.7 million at the end of the fourth quarter. On the second spot was Royce & Associates which amassed $17.4 million worth of shares. Moreover, Barington Capital Group, Renaissance Technologies, and Diamond Hill Capital were also bullish on TriMas Corp (NASDAQ:TRS), allocating a large percentage of their portfolios to this stock.
Since TriMas Corp (NASDAQ:TRS) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of money managers that elected to cut their entire stakes in the third quarter. Intriguingly, Michael Platt and William Reeves’s BlueCrest Capital Mgmt. cut the largest investment of the 700 funds followed by Insider Monkey, comprising about $0.8 million in stock, and Frederick DiSanto’s Ancora Advisors was right behind this move, as the fund said goodbye to about $0 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to TriMas Corp (NASDAQ:TRS). These stocks are Redwood Trust, Inc. (NYSE:RWT), YETI Holdings, Inc. (NYSE:YETI), EnPro Industries, Inc. (NYSE:NPO), and McGrath RentCorp (NASDAQ:MGRC). This group of stocks’ market values are similar to TRS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RWT | 12 | 83440 | 0 |
| YETI | 10 | 27704 | 10 |
| NPO | 15 | 117649 | -1 |
| MGRC | 23 | 119085 | 1 |
| Average | 15 | 86970 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $112 million in TRS’s case. McGrath RentCorp (NASDAQ:MGRC) is the most popular stock in this table. On the other hand YETI Holdings, Inc. (NYSE:YETI) is the least popular one with only 10 bullish hedge fund positions. TriMas Corp (NASDAQ:TRS) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on TRS, though not to the same extent, as the stock returned 18.3% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
