Reputable billionaire investors such as Jim Simons, Cliff Asness and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won't accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
TriMas Corp (NASDAQ:TRS) was in 15 hedge funds' portfolios at the end of the second quarter of 2019. TRS investors should be aware of a decrease in hedge fund interest in recent months. There were 18 hedge funds in our database with TRS holdings at the end of the previous quarter. Our calculations also showed that TRS isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are numerous tools shareholders can use to assess publicly traded companies. A couple of the less known tools are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best money managers can beat the S&P 500 by a very impressive amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's go over the new hedge fund action surrounding TriMas Corp (NASDAQ:TRS).
What have hedge funds been doing with TriMas Corp (NASDAQ:TRS)?
Heading into the third quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in TRS over the last 16 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Pzena Investment Management was the largest shareholder of TriMas Corp (NASDAQ:TRS), with a stake worth $48.1 million reported as of the end of March. Trailing Pzena Investment Management was Renaissance Technologies, which amassed a stake valued at $16.2 million. Royce & Associates, Barington Capital Group, and Diamond Hill Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Because TriMas Corp (NASDAQ:TRS) has experienced bearish sentiment from hedge fund managers, it's easy to see that there exists a select few hedgies that decided to sell off their entire stakes by the end of the second quarter. At the top of the heap, Israel Englander's Millennium Management cut the biggest stake of all the hedgies tracked by Insider Monkey, comprising close to $2.1 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also sold off its stock, about $1.3 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 3 funds by the end of the second quarter.
Let's go over hedge fund activity in other stocks similar to TriMas Corp (NASDAQ:TRS). These stocks are MRC Global Inc (NYSE:MRC), Linx S.A. (NYSE:LINX), Sirius International Insurance Group, Ltd. (NASDAQ:SG), and Cavco Industries, Inc. (NASDAQ:CVCO). This group of stocks' market valuations match TRS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MRC,15,105613,-3 LINX,14,84329,14 SG,1,3377,0 CVCO,16,135968,-3 Average,11.5,82322,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $112 million in TRS's case. Cavco Industries, Inc. (NASDAQ:CVCO) is the most popular stock in this table. On the other hand Sirius International Insurance Group, Ltd. (NASDAQ:SG) is the least popular one with only 1 bullish hedge fund positions. TriMas Corp (NASDAQ:TRS) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately TRS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TRS were disappointed as the stock returned -1% during the third quarter and underperformed 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.
Disclosure: None. This article was originally published at Insider Monkey.