Should I Avoid Triterras, Inc. (TRIT)?

In this article we will analyze whether Triterras, Inc. (NASDAQ:TRIT) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is Triterras, Inc. (NASDAQ:TRIT) going to take off soon? Investors who are in the know were getting less bullish. The number of long hedge fund positions were cut by 2 in recent months. Triterras, Inc. (NASDAQ:TRIT) was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 12. Our calculations also showed that TRIT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 12 hedge funds in our database with TRIT positions at the end of the first quarter.

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 S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Bart Baum of Ionic Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to go over the key hedge fund action encompassing Triterras, Inc. (NASDAQ:TRIT).

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

At second quarter’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in TRIT a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Triterras, Inc. (NASDAQ:TRIT) was held by Millennium Management, which reported holding $17.7 million worth of stock at the end of June. It was followed by Adage Capital Management with a $5.2 million position. Other investors bullish on the company included Ionic Capital Management, Whetstone Capital Advisors, and Point72 Asset Management. In terms of the portfolio weights assigned to each position Whetstone Capital Advisors allocated the biggest weight to Triterras, Inc. (NASDAQ:TRIT), around 0.48% of its 13F portfolio. Ionic Capital Management is also relatively very bullish on the stock, setting aside 0.31 percent of its 13F equity portfolio to TRIT.

Because Triterras, Inc. (NASDAQ:TRIT) has experienced a decline in interest from hedge fund managers, it’s safe to say that there was a specific group of money managers that slashed their positions entirely in the second quarter. At the top of the heap, Matthew Halbower’s Pentwater Capital Management sold off the largest position of the 750 funds tracked by Insider Monkey, comprising close to $0.9 million in stock. Steve Cohen’s fund, Point72 Asset Management, also said goodbye to its stock, about $0.3 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds in the second quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Triterras, Inc. (NASDAQ:TRIT) but similarly valued. We will take a look at Verso Corporation (NYSE:VRS), Cambridge Bancorp (NASDAQ:CATC), AC Immune SA (NASDAQ:ACIU), Gilat Satellite Networks Ltd. (NASDAQ:GILT), Big 5 Sporting Goods Corporation (NASDAQ:BGFV), Ebang International Holdings Inc. (NASDAQ:EBON), and Catchmark Timber Trust Inc (NYSE:CTT). This group of stocks’ market valuations are closest to TRIT’s market valuation.

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As you can see these stocks had an average of 11.3 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $17 million in TRIT’s case. Big 5 Sporting Goods Corporation (NASDAQ:BGFV) is the most popular stock in this table. On the other hand Ebang International Holdings Inc. (NASDAQ:EBON) is the least popular one with only 5 bullish hedge fund positions. Triterras, Inc. (NASDAQ:TRIT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TRIT is 45.9. 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 negative signal and 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 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately TRIT wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TRIT investors were disappointed as the stock returned -13.9% since the end of June (through 9/27) 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 most of these stocks already outperformed the market in 2021.

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

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