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At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. 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 Trimble Inc. (NASDAQ:TRMB) at the end of the second quarter and determine whether the smart money was really smart about this stock.
Trimble Inc. (NASDAQ:TRMB) shareholders have witnessed an increase in hedge fund sentiment in recent months. Trimble Inc. (NASDAQ:TRMB) was in 26 hedge funds' portfolios at the end of June. The all time high for this statistics is 30. Our calculations also showed that TRMB isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
In the 21st century investor’s toolkit there are a large number of metrics investors have at their disposal to assess publicly traded companies. Some of the most underrated metrics are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the best money managers can outperform their index-focused peers by a healthy amount (see the details here).
Philip Hempleman of Ardsley Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. With all of this in mind we're going to go over the new hedge fund action surrounding Trimble Inc. (NASDAQ:TRMB).
How are hedge funds trading Trimble Inc. (NASDAQ:TRMB)?
At Q2's end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards TRMB over the last 20 quarters. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
More specifically, Generation Investment Management was the largest shareholder of Trimble Inc. (NASDAQ:TRMB), with a stake worth $495 million reported as of the end of September. Trailing Generation Investment Management was Impax Asset Management, which amassed a stake valued at $349.7 million. D E Shaw, Arrowstreet Capital, and Citadel Investment Group 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 Impax Asset Management allocated the biggest weight to Trimble Inc. (NASDAQ:TRMB), around 3.59% of its 13F portfolio. Generation Investment Management is also relatively very bullish on the stock, dishing out 2.86 percent of its 13F equity portfolio to TRMB.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls' herd. Citadel Investment Group, managed by Ken Griffin, created the most outsized position in Trimble Inc. (NASDAQ:TRMB). Citadel Investment Group had $11.9 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also initiated a $2.1 million position during the quarter. The other funds with new positions in the stock are Mikal Patel's Oribel Capital Management, Renaissance Technologies, and Minhua Zhang's Weld Capital Management.
Let's check out hedge fund activity in other stocks similar to Trimble Inc. (NASDAQ:TRMB). We will take a look at VICI Properties Inc. (NYSE:VICI), Citizens Financial Group Inc (NYSE:CFG), StoneCo Ltd. (NASDAQ:STNE), United Rentals, Inc. (NYSE:URI), Booz Allen Hamilton Holding Corporation (NYSE:BAH), Cable One Inc (NYSE:CABO), and Regions Financial Corporation (NYSE:RF). 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 VICI,51,1573468,15 CFG,47,841328,1 STNE,35,1342781,1 URI,40,889794,-3 BAH,25,219237,-2 CABO,24,684886,1 RF,26,191710,-11 Average,35.4,820458,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.4 hedge funds with bullish positions and the average amount invested in these stocks was $820 million. That figure was $980 million in TRMB's case. VICI Properties Inc. (NYSE:VICI) is the most popular stock in this table. On the other hand Cable One Inc (NYSE:CABO) is the least popular one with only 24 bullish hedge fund positions. Trimble Inc. (NASDAQ:TRMB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TRMB is 39.7. 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 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 gained 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. A small number of hedge funds were also right about betting on TRMB as the stock returned 10.8% since the end of June (through September 25th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.