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Hedge Funds Are Betting On Triumph Group Inc (TGI)

Debasis Saha

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Triumph Group Inc (NYSE:TGI) based on that data.

Triumph Group Inc (NYSE:TGI) was in 18 hedge funds' portfolios at the end of the first quarter of 2020. TGI has experienced an increase in support from the world's most elite money managers lately. There were 16 hedge funds in our database with TGI holdings at the end of the previous quarter. Our calculations also showed that TGI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.

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 58 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.

[caption id="attachment_255014" align="aligncenter" width="400"] Clint Carlson of Carlson Capital[/caption]

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 interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's check out the recent hedge fund action encompassing Triumph Group Inc (NYSE:TGI).

Hedge fund activity in Triumph Group Inc (NYSE:TGI)

At the end of the first quarter, 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. The graph below displays the number of hedge funds with bullish position in TGI over the last 18 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 TGI A Good Stock To Buy?

The largest stake in Triumph Group Inc (NYSE:TGI) was held by Maple Rock Capital, which reported holding $16 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $8.5 million position. Other investors bullish on the company included D E Shaw, Juniper Investment Company, and Royce & Associates. In terms of the portfolio weights assigned to each position Maple Rock Capital allocated the biggest weight to Triumph Group Inc (NYSE:TGI), around 4.12% of its 13F portfolio. Juniper Investment Company is also relatively very bullish on the stock, earmarking 3.47 percent of its 13F equity portfolio to TGI.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Maple Rock Capital, managed by Len Kipp and Xavier Majic, established the biggest position in Triumph Group Inc (NYSE:TGI). Maple Rock Capital had $16 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $1.1 million position during the quarter. The other funds with new positions in the stock are Matt Sirovich and Jeremy Mindich's Scopia Capital, Dmitry Balyasny's Balyasny Asset Management, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Triumph Group Inc (NYSE:TGI) but similarly valued. We will take a look at PDL BioPharma Inc. (NASDAQ:PDLI), MRC Global Inc (NYSE:MRC), Pitney Bowes Inc. (NYSE:PBI), and Valhi, Inc. (NYSE:VHI). This group of stocks' market values resemble TGI's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PDLI,14,77459,-5 MRC,17,20409,-3 PBI,15,32943,-8 VHI,5,1855,-2 Average,12.75,33167,-4.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $38 million in TGI's case. MRC Global Inc (NYSE:MRC) is the most popular stock in this table. On the other hand Valhi, Inc. (NYSE:VHI) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Triumph Group Inc (NYSE:TGI) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 13.4% in 2020 through June 22nd but still managed to beat the market by 15.9 percentage points. Hedge funds were also right about betting on TGI as the stock returned 38.2% so far in Q2 (through June 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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