In this article we will analyze whether Tristate Capital Holdings Inc (NASDAQ:TSC) 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 Tristate Capital Holdings Inc (NASDAQ:TSC) undervalued? Hedge funds were becoming more confident. The number of bullish hedge fund positions advanced by 2 in recent months. Tristate Capital Holdings Inc (NASDAQ:TSC) was in 18 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TSC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 115 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.
Fred Cummings of Elizabeth Park Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. Now let’s go over the key hedge fund action encompassing Tristate Capital Holdings Inc (NASDAQ:TSC).
Do Hedge Funds Think TSC Is A Good Stock To Buy Now?
At the end of March, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TSC over the last 23 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
More specifically, Royce & Associates was the largest shareholder of Tristate Capital Holdings Inc (NASDAQ:TSC), with a stake worth $29.2 million reported as of the end of March. Trailing Royce & Associates was Elizabeth Park Capital Management, which amassed a stake valued at $5.4 million. D E Shaw, Arrowstreet Capital, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Second Curve Capital allocated the biggest weight to Tristate Capital Holdings Inc (NASDAQ:TSC), around 3.62% of its 13F portfolio. Elizabeth Park Capital Management is also relatively very bullish on the stock, dishing out 1.8 percent of its 13F equity portfolio to TSC.
As aggregate interest increased, specific money managers have jumped into Tristate Capital Holdings Inc (NASDAQ:TSC) headfirst. ExodusPoint Capital, managed by Michael Gelband, initiated the most outsized position in Tristate Capital Holdings Inc (NASDAQ:TSC). ExodusPoint Capital had $0.3 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $0.3 million position during the quarter. The only other fund with a brand new TSC position is Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).
Let’s now take a look at hedge fund activity in other stocks similar to Tristate Capital Holdings Inc (NASDAQ:TSC). We will take a look at ScanSource, Inc. (NASDAQ:SCSC), Intercept Pharmaceuticals Inc (NASDAQ:ICPT), Hollysys Automation Technologies Ltd (NASDAQ:HOLI), Helix Energy Solutions Group Inc. (NYSE:HLX), SP Plus Corp (NASDAQ:SP), Glatfelter Corp (NYSE:GLT), and Clene Inc. (NASDAQ:CLNN). This group of stocks’ market values match TSC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SCSC | 11 | 66261 | 1 |
| ICPT | 15 | 53876 | -6 |
| HOLI | 18 | 91440 | 2 |
| HLX | 11 | 15044 | 0 |
| SP | 10 | 27117 | -4 |
| GLT | 8 | 30694 | 1 |
| CLNN | 8 | 6341 | 6 |
| Average | 11.6 | 41539 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $57 million in TSC’s case. Hollysys Automation Technologies Ltd (NASDAQ:HOLI) is the most popular stock in this table. On the other hand Glatfelter Corp (NYSE:GLT) is the least popular one with only 8 bullish hedge fund positions. Tristate Capital Holdings Inc (NASDAQ:TSC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TSC is 87. 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 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately TSC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TSC were disappointed as the stock returned -10.8% since the end of March (through 7/23) 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.
Follow Tristate Capital Holdings Inc.
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Disclosure: None. This article was originally published at Insider Monkey.
