Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That’s why we pay special attention to hedge fund activity in these stocks.
Triumph Group Inc (NYSE:TGI) was in 12 hedge funds’ portfolios at the end of March. TGI investors should pay attention to an increase in support from the world’s most elite money managers of late. There were 8 hedge funds in our database with TGI holdings at the end of the previous quarter. Our calculations also showed that TGI isn’t among the 30 most popular stocks among hedge funds.
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 40 percentage points since May 2014 through May 30, 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 take a peek at the latest hedge fund action regarding Triumph Group Inc (NYSE:TGI).
Hedge fund activity in Triumph Group Inc (NYSE:TGI)
At Q1’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in TGI over the last 15 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Royce & Associates was the largest shareholder of Triumph Group Inc (NYSE:TGI), with a stake worth $15.5 million reported as of the end of March. Trailing Royce & Associates was Renaissance Technologies, which amassed a stake valued at $10.2 million. D E Shaw, Citadel Investment Group, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, key money managers were breaking ground themselves. Renaissance Technologies, managed by Jim Simons, assembled the most outsized position in Triumph Group Inc (NYSE:TGI). Renaissance Technologies had $10.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $1.2 million investment in the stock during the quarter. The other funds with brand new TGI positions are Benjamin A. Smith’s Laurion Capital Management, Louis Bacon’s Moore Global Investments, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
Let’s also examine hedge fund activity in other stocks similar to Triumph Group Inc (NYSE:TGI). We will take a look at Granite Point Mortgage Trust Inc. (NYSE:GPMT), Berry Petroleum Corporation (NASDAQ:BRY), Trueblue Inc (NYSE:TBI), and Lantheus Holdings Inc (NASDAQ:LNTH). This group of stocks’ market caps resemble TGI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GPMT | 12 | 43820 | 6 |
| BRY | 16 | 166506 | 2 |
| TBI | 17 | 78413 | 2 |
| LNTH | 18 | 99743 | 1 |
| Average | 15.75 | 97121 | 2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $97 million. That figure was $45 million in TGI’s case. Lantheus Holdings Inc (NASDAQ:LNTH) is the most popular stock in this table. On the other hand Granite Point Mortgage Trust Inc. (NYSE:GPMT) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Triumph Group Inc (NYSE:TGI) is even less popular than GPMT. Hedge funds dodged a bullet by taking a bearish stance towards TGI. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately TGI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); TGI investors were disappointed as the stock returned -0.5% during the same time frame and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in the second quarter.
Disclosure: None. This article was originally published at Insider Monkey.
