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How Did Trimble Inc. (TRMB) Compare Against Top Hedge Fund Stocks in 2019?

Debasis Saha

We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained more than 57% each. Hedge funds' top 3 stock picks returned 45.7% last year and beat the S&P 500 ETFs by 14.5 percentage points. That's a big deal. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Trimble Inc. (NASDAQ:TRMB) shareholders have witnessed an increase in support from the world's most elite money managers recently. TRMB was in 25 hedge funds' portfolios at the end of September. There were 16 hedge funds in our database with TRMB positions at the end of the previous quarter. Our calculations also showed that TRMB isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

In the eyes of most traders, hedge funds are viewed as slow, outdated investment tools of years past. While there are greater than 8000 funds with their doors open at present, Our experts look at the top tier of this group, around 750 funds. These investment experts preside over bulk of the smart money's total capital, and by watching their best stock picks, Insider Monkey has spotted a number of investment strategies that have historically defeated the broader indices. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

[caption id="attachment_365194" align="alignnone" width="600"] David E. Shaw of D.E. Shaw[/caption]

David E. Shaw of D.E. Shaw

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock is still extremely cheap despite already gaining 20 percent. With all of this in mind let's review the new hedge fund action surrounding Trimble Inc. (NASDAQ:TRMB).

What does smart money think about Trimble Inc. (NASDAQ:TRMB)?

At Q3's end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 56% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TRMB over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is TRMB A Good Stock To Buy?

More specifically, Impax Asset Management was the largest shareholder of Trimble Inc. (NASDAQ:TRMB), with a stake worth $235.5 million reported as of the end of September. Trailing Impax Asset Management was Select Equity Group, which amassed a stake valued at $168.6 million. D E Shaw, Millennium Management, and Point72 Asset Management 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 Harvest Capital Strategies allocated the biggest weight to Trimble Inc. (NASDAQ:TRMB), around 5.27% of its 13F portfolio. Albar Capital is also relatively very bullish on the stock, setting aside 4.59 percent of its 13F equity portfolio to TRMB.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, established the biggest position in Trimble Inc. (NASDAQ:TRMB). Point72 Asset Management had $10.3 million invested in the company at the end of the quarter. Javier Velazquez's Albar Capital also initiated a $10 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Paul Marshall and Ian Wace's Marshall Wace, and Benjamin A. Smith's Laurion Capital Management.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Trimble Inc. (NASDAQ:TRMB) but similarly valued. These stocks are Devon Energy Corp (NYSE:DVN), Erie Indemnity Company (NASDAQ:ERIE), Shaw Communications Inc (NYSE:SJR), and American Financial Group (NYSE:AFG). This group of stocks' market valuations are closest to TRMB's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DVN,39,1275716,3 ERIE,19,83890,7 SJR,12,270319,0 AFG,24,421046,2 Average,23.5,512743,3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $513 million. That figure was $593 million in TRMB's case. Devon Energy Corp (NYSE:DVN) is the most popular stock in this table. On the other hand Shaw Communications Inc (NYSE:SJR) is the least popular one with only 12 bullish hedge fund positions. Trimble Inc. (NASDAQ:TRMB) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately TRMB wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TRMB were disappointed as the stock returned 26.7% in 2019 and trailed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

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