Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards TransUnion (NYSE:TRU).
TransUnion (NYSE:TRU) shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. TransUnion (NYSE:TRU) was in 38 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 47. Our calculations also showed that TRU isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s take a peek at the key hedge fund action regarding TransUnion (NYSE:TRU).
Alex Litowitz of Magnetar Capital
Do Hedge Funds Think TRU Is A Good Stock To Buy Now?
At Q3’s end, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. On the other hand, there were a total of 47 hedge funds with a bullish position in TRU a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in TransUnion (NYSE:TRU) was held by Select Equity Group, which reported holding $736.7 million worth of stock at the end of September. It was followed by BlueSpruce Investments with a $233.9 million position. Other investors bullish on the company included Alkeon Capital Management, Farallon Capital, and Junto Capital Management. In terms of the portfolio weights assigned to each position Lansing Management allocated the biggest weight to TransUnion (NYSE:TRU), around 14.13% of its 13F portfolio. Incline Global Management is also relatively very bullish on the stock, setting aside 4.76 percent of its 13F equity portfolio to TRU.
Now, key hedge funds have been driving this bullishness. TwinBeech Capital, managed by Jinghua Yan, initiated the largest position in TransUnion (NYSE:TRU). TwinBeech Capital had $7.9 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $4.1 million investment in the stock during the quarter. The following funds were also among the new TRU investors: Thomas Lee’s Lee Capital Management, Alec Litowitz and Ross Laser’s Magnetar Capital, and Steve Cohen’s Point72 Asset Management.
Let’s now take a look at hedge fund activity in other stocks similar to TransUnion (NYSE:TRU). These stocks are Mid America Apartment Communities Inc (NYSE:MAA), PPL Corporation (NYSE:PPL), Sun Communities Inc (NYSE:SUI), Martin Marietta Materials, Inc. (NYSE:MLM), Fox Corporation (NASDAQ:FOX), Edison International (NYSE:EIX), and Fortis Inc. (NYSE:FTS). This group of stocks’ market values resemble TRU’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MAA | 22 | 254912 | 8 |
| PPL | 20 | 140767 | -3 |
| SUI | 33 | 794559 | 3 |
| MLM | 42 | 2154281 | 8 |
| FOX | 25 | 665945 | 0 |
| EIX | 25 | 1240177 | 7 |
| FTS | 5 | 171234 | -4 |
| Average | 24.6 | 774554 | 2.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.6 hedge funds with bullish positions and the average amount invested in these stocks was $775 million. That figure was $2181 million in TRU’s case. Martin Marietta Materials, Inc. (NYSE:MLM) is the most popular stock in this table. On the other hand Fortis Inc. (NYSE:FTS) is the least popular one with only 5 bullish hedge fund positions. TransUnion (NYSE:TRU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TRU is 76.8. 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 positive signal but 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately TRU wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TRU were disappointed as the stock returned -0.9% since the end of September (through 11/30) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
