Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds and investors’ positions as of the end of the third quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Triton International Limited (NYSE:TRTN) based on that data.
Is Triton International Limited (NYSE:TRTN) a healthy stock for your portfolio? Money managers are becoming less hopeful. The number of bullish hedge fund bets shrunk by 3 lately. Our calculations also showed that trtn isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 18 percentage points since May 2014 through December 3, 2018 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let’s view the new hedge fund action surrounding Triton International Limited (NYSE:TRTN).
What does the smart money think about Triton International Limited (NYSE:TRTN)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the second quarter of 2018. By comparison, 14 hedge funds held shares or bullish call options in TRTN heading into this year. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, Laurion Capital Management was the largest shareholder of Triton International Limited (NYSE:TRTN), with a stake worth $20.1 million reported as of the end of September. Trailing Laurion Capital Management was Alyeska Investment Group, which amassed a stake valued at $12.6 million. Second Curve Capital, Spindletop Capital, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Triton International Limited (NYSE:TRTN) has faced declining sentiment from hedge fund managers, logic holds that there is a sect of hedge funds that decided to sell off their positions entirely by the end of the third quarter. It’s worth mentioning that Jerome L. Simon’s Lonestar Capital Management dropped the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling about $4.9 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also cut its stock, about $3.8 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 3 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to Triton International Limited (NYSE:TRTN). These stocks are AeroVironment, Inc. (NASDAQ:AVAV), Alliance Resource Partners, L.P. (NASDAQ:ARLP), AppFolio Inc (NASDAQ:APPF), and China Biologic Products Holdings, Inc. (NASDAQ:CBPO). This group of stocks’ market values are similar to TRTN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AVAV | 13 | 53276 | 1 |
| ARLP | 9 | 84323 | 1 |
| APPF | 19 | 216393 | 2 |
| CBPO | 8 | 256674 | -1 |
| Average | 12.25 | 152667 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $153 million. That figure was $61 million in TRTN’s case. AppFolio Inc (NASDAQ:APPF) is the most popular stock in this table. On the other hand China Biologic Products Holdings, Inc. (NASDAQ:CBPO) is the least popular one with only 8 bullish hedge fund positions. Triton International Limited (NYSE:TRTN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard APPF might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.