TransUnion (TRU): Hedge Funds In Wait-and-See Mode

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles 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 over the last 6 years and analyze what the smart money thinks of TransUnion (NYSE:TRU) based on that data.

Hedge fund interest in TransUnion (NYSE:TRU) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that TRU isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare TRU to other stocks including Wheaton Precious Metals Corp. (NYSE:WPM), ON Semiconductor Corporation (NASDAQ:ON), and Quest Diagnostics Incorporated (NYSE:DGX) to get a better sense of its popularity.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 glance at the recent hedge fund action encompassing TransUnion (NYSE:TRU).

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

At the end of the first quarter, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TRU over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in TransUnion (NYSE:TRU) was held by Select Equity Group, which reported holding $391.2 million worth of stock at the end of December. It was followed by BlueSpruce Investments with a $309.2 million position. Other investors bullish on the company included Farallon Capital, D E Shaw, and Palestra Capital Management. In terms of the portfolio weights assigned to each position Lansing Management allocated the biggest weight to TransUnion (NYSE:TRU), around 13.95% of its 13F portfolio. ROAM Global Management is also relatively very bullish on the stock, earmarking 12.2 percent of its 13F equity portfolio to TRU.

Since TransUnion (NYSE:TRU) has witnessed falling interest from the smart money, it’s safe to say that there were a few hedgies that elected to cut their full holdings in the first quarter. It’s worth mentioning that Robert Pohly’s Samlyn Capital sold off the biggest stake of the 750 funds tracked by Insider Monkey, worth an estimated $59.6 million in stock. Steve Cohen’s fund, Point72 Asset Management, also dumped its stock, about $29.2 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as TransUnion (NYSE:TRU) but similarly valued. These stocks are Wheaton Precious Metals Corp. (NYSE:WPM), ON Semiconductor Corporation (NASDAQ:ON), Quest Diagnostics Incorporated (NYSE:DGX), Bio-Rad Laboratories, Inc. (NYSE:BIO), Celanese Corporation (NYSE:CE), Healthpeak Properties, Inc. (NYSE:PEAK), and Albemarle Corporation (NYSE:ALB). All of these stocks’ market caps resemble TRU’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.1 hedge funds with bullish positions and the average amount invested in these stocks was $626 million. That figure was $2290 million in TRU’s case. Bio-Rad Laboratories, Inc. (NYSE:BIO) is the most popular stock in this table. On the other hand Healthpeak Properties, Inc. (NYSE:PEAK) is the least popular one with only 18 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 75.4. 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 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Hedge funds were also right about betting on TRU as the stock returned 20.6% since the end of Q1 (through 6/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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