Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Thomson Reuters Corporation (NYSE:TRI).
Thomson Reuters Corporation (NYSE:TRI) has seen a decrease in activity from the world’s largest hedge funds recently. Thomson Reuters Corporation (NYSE:TRI) was in 27 hedge funds’ portfolios at the end of June. The all time high for this statistic is 28. There were 28 hedge funds in our database with TRI holdings at the end of March. Our calculations also showed that TRI isn’t among the 30 most popular stocks among hedge funds (click for Q2 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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Robert Atchinson of Adage Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium 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. Now let’s take a gander at the latest hedge fund action encompassing Thomson Reuters Corporation (NYSE:TRI).
Do Hedge Funds Think TRI Is A Good Stock To Buy Now?
At Q2’s end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. On the other hand, there were a total of 25 hedge funds with a bullish position in TRI a year ago. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
The largest stake in Thomson Reuters Corporation (NYSE:TRI) was held by Junto Capital Management, which reported holding $56 million worth of stock at the end of June. It was followed by Woodline Partners with a $50.2 million position. Other investors bullish on the company included D E Shaw, Adage Capital Management, and Echo Street Capital Management. In terms of the portfolio weights assigned to each position MIK Capital allocated the biggest weight to Thomson Reuters Corporation (NYSE:TRI), around 5.5% of its 13F portfolio. Strycker View Capital is also relatively very bullish on the stock, earmarking 5.35 percent of its 13F equity portfolio to TRI.
Since Thomson Reuters Corporation (NYSE:TRI) has witnessed bearish sentiment from the smart money, logic holds that there is a sect of hedge funds who sold off their full holdings last quarter. Interestingly, Anand Parekh’s Alyeska Investment Group dropped the largest investment of all the hedgies watched by Insider Monkey, totaling close to $6.5 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund cut about $4.5 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Thomson Reuters Corporation (NYSE:TRI). We will take a look at Johnson Controls International plc (NYSE:JCI), EOG Resources Inc (NYSE:EOG), TC Energy Corporation (NYSE:TRP), Align Technology, Inc. (NASDAQ:ALGN), Monster Beverage Corp (NASDAQ:MNST), eBay Inc (NASDAQ:EBAY), and Marvell Technology Group Ltd. (NASDAQ:MRVL). All of these stocks’ market caps resemble TRI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JCI | 39 | 1270005 | -2 |
| EOG | 35 | 411137 | 5 |
| TRP | 22 | 118166 | -3 |
| ALGN | 57 | 2689837 | 8 |
| MNST | 46 | 2310929 | 1 |
| EBAY | 39 | 3126079 | -12 |
| MRVL | 51 | 1390237 | 18 |
| Average | 41.3 | 1616627 | 2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.3 hedge funds with bullish positions and the average amount invested in these stocks was $1617 million. That figure was $355 million in TRI’s case. Align Technology, Inc. (NASDAQ:ALGN) is the most popular stock in this table. On the other hand TC Energy Corporation (NYSE:TRP) is the least popular one with only 22 bullish hedge fund positions. Thomson Reuters Corporation (NYSE:TRI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TRI is 40.1. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on TRI as the stock returned 17.7% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.
Follow Thomson Reuters Corp (NYSE:TRI)
Follow Thomson Reuters Corp (NYSE:TRI)
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Disclosure: None. This article was originally published at Insider Monkey.
