Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Triumph Bancorp Inc (NASDAQ:TBK).
Is Triumph Bancorp Inc (NASDAQ:TBK) the right pick for your portfolio? The best stock pickers were becoming hopeful. The number of long hedge fund bets rose by 4 in recent months. Triumph Bancorp Inc (NASDAQ:TBK) was in 16 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 13. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TBK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Christian Leone of Luxor Capital Group
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 take a look at the recent hedge fund action surrounding Triumph Bancorp Inc (NASDAQ:TBK).
Do Hedge Funds Think TBK Is A Good Stock To Buy Now?
At first quarter’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the previous quarter. On the other hand, there were a total of 6 hedge funds with a bullish position in TBK a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Christian Leone’s Luxor Capital Group has the largest position in Triumph Bancorp Inc (NASDAQ:TBK), worth close to $136.8 million, accounting for 1.7% of its total 13F portfolio. The second largest stake is held by Royce & Associates, led by Chuck Royce, holding a $55.4 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions comprise Richard Driehaus’s Driehaus Capital, Mark Lee’s Forest Hill Capital and Christian Leone’s Luxor Capital Group. In terms of the portfolio weights assigned to each position Second Curve Capital allocated the biggest weight to Triumph Bancorp Inc (NASDAQ:TBK), around 7.46% of its 13F portfolio. Forest Hill Capital is also relatively very bullish on the stock, dishing out 3.44 percent of its 13F equity portfolio to TBK.
As aggregate interest increased, some big names have been driving this bullishness. Luxor Capital Group, managed by Christian Leone, created the biggest call position in Triumph Bancorp Inc (NASDAQ:TBK). Luxor Capital Group had $7.7 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $1.6 million investment in the stock during the quarter. The other funds with brand new TBK positions are Ken Griffin’s Citadel Investment Group, Lee Ainslie’s Maverick Capital, and Robert Joseph Caruso’s Select Equity Group.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Triumph Bancorp Inc (NASDAQ:TBK) but similarly valued. These stocks are PennyMac Mortgage Investment Trust (NYSE:PMT), Otter Tail Corporation (NASDAQ:OTTR), Columbia Financial, Inc. (NASDAQ:CLBK), Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM), Eargo, Inc. (NASDAQ:EAR), Materialise NV (NASDAQ:MTLS), and The Bank of N.T. Butterfield & Son Limited (NYSE:NTB). This group of stocks’ market values are closest to TBK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PMT | 8 | 15704 | -7 |
| OTTR | 11 | 58584 | 2 |
| CLBK | 8 | 43463 | 0 |
| HYFM | 14 | 84289 | -5 |
| EAR | 12 | 77544 | -2 |
| MTLS | 8 | 290915 | 3 |
| NTB | 17 | 88623 | 1 |
| Average | 11.1 | 94160 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.1 hedge funds with bullish positions and the average amount invested in these stocks was $94 million. That figure was $271 million in TBK’s case. The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) is the most popular stock in this table. On the other hand PennyMac Mortgage Investment Trust (NYSE:PMT) is the least popular one with only 8 bullish hedge fund positions. Triumph Bancorp Inc (NASDAQ:TBK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TBK is 83.4. 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. 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 TBK wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TBK were disappointed as the stock returned -3.1% 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.
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Disclosure: None. This article was originally published at Insider Monkey.
