Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about TransUnion (NYSE:TRU) in this article.
TransUnion (NYSE:TRU) was in 35 hedge funds’ portfolios at the end of June. The all time high for this statistic is 47. TRU has experienced a decrease in hedge fund sentiment in recent months. There were 41 hedge funds in our database with TRU holdings at the end of March. Our calculations also showed that TRU isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In today’s marketplace there are a large number of formulas stock traders have at their disposal to analyze their holdings. A couple of the less known formulas are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outperform the market by a healthy margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech 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. With all of this in mind let’s take a gander at the new hedge fund action encompassing TransUnion (NYSE:TRU).
Do Hedge Funds Think TRU Is A Good Stock To Buy Now?
At the end of June, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the first quarter of 2020. By comparison, 47 hedge funds held shares or bullish call options in TRU a year ago. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
The largest stake in TransUnion (NYSE:TRU) was held by Select Equity Group, which reported holding $746.5 million worth of stock at the end of June. It was followed by BlueSpruce Investments with a $389.6 million position. Other investors bullish on the company included Farallon Capital, Alkeon Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Lansing Management allocated the biggest weight to TransUnion (NYSE:TRU), around 14.78% of its 13F portfolio. BlueSpruce Investments is also relatively very bullish on the stock, designating 7.1 percent of its 13F equity portfolio to TRU.
Due to the fact that TransUnion (NYSE:TRU) has witnessed falling interest from hedge fund managers, we can see that there exists a select few hedgies who were dropping their positions entirely heading into Q3. Interestingly, Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management dropped the biggest stake of all the hedgies watched by Insider Monkey, totaling about $187.2 million in stock. Rishi Renjen’s fund, ROAM Global Management, also dropped its stock, about $16.7 million worth. These transactions are important to note, as total hedge fund interest dropped by 6 funds heading into Q3.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as TransUnion (NYSE:TRU) but similarly valued. These stocks are DraftKings Inc. (NASDAQ:DKNG), MGM Resorts International (NYSE:MGM), Church & Dwight Co., Inc. (NYSE:CHD), Gartner Inc (NYSE:IT), Fortis Inc. (NYSE:FTS), StoneCo Ltd. (NASDAQ:STNE), and Avantor, Inc. (NYSE:AVTR). This group of stocks’ market valuations resemble TRU’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DKNG | 26 | 927908 | -17 |
| MGM | 59 | 2889161 | 2 |
| CHD | 35 | 1383073 | 8 |
| IT | 39 | 1988886 | -1 |
| FTS | 9 | 185027 | -1 |
| STNE | 44 | 2739991 | 5 |
| AVTR | 44 | 2178398 | -4 |
| Average | 36.6 | 1756063 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.6 hedge funds with bullish positions and the average amount invested in these stocks was $1756 million. That figure was $2610 million in TRU’s case. MGM Resorts International (NYSE:MGM) is the most popular stock in this table. On the other hand Fortis Inc. (NYSE:FTS) is the least popular one with only 9 bullish hedge fund positions. TransUnion (NYSE:TRU) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TRU is 47.3. 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 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. A small number of hedge funds were also right about betting on TRU as the stock returned 1.7% since the end of the second quarter (through 10/11) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
