In this article you are going to find out whether hedge funds think Trimble Inc. (NASDAQ:TRMB) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Trimble Inc. (NASDAQ:TRMB) has experienced a decrease in hedge fund interest lately. TRMB was in 20 hedge funds' portfolios at the end of March. There were 30 hedge funds in our database with TRMB holdings 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 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_189672" align="aligncenter" width="400"] David Blood of Generation Investment Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. 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 take a peek at the recent hedge fund action regarding Trimble Inc. (NASDAQ:TRMB).
Hedge fund activity in Trimble Inc. (NASDAQ:TRMB)
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in TRMB a year ago. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Generation Investment Management was the largest shareholder of Trimble Inc. (NASDAQ:TRMB), with a stake worth $360.3 million reported as of the end of September. Trailing Generation Investment Management was Impax Asset Management, which amassed a stake valued at $286.2 million. Select Equity Group, D E Shaw, and Arrowstreet Capital 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 3.81% of its 13F portfolio. Generation Investment Management is also relatively very bullish on the stock, dishing out 2.56 percent of its 13F equity portfolio to TRMB.
Because Trimble Inc. (NASDAQ:TRMB) has experienced bearish sentiment from the smart money, it's safe to say that there is a sect of hedgies who sold off their positions entirely by the end of the first quarter. At the top of the heap, Mikal Patel's Oribel Capital Management cut the largest stake of all the hedgies followed by Insider Monkey, comprising about $16.2 million in stock. Avi Fruchter's fund, Anavon Capital, also dumped its stock, about $6.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 10 funds by the end of the first quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Trimble Inc. (NASDAQ:TRMB) but similarly valued. These stocks are ASE Technology Holding Co., Ltd. (NYSE:ASX), Alleghany Corporation (NYSE:Y), Pool Corporation (NASDAQ:POOL), and Camden Property Trust (NYSE:CPT). This group of stocks' market caps are similar to TRMB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ASX,9,145541,-1 Y,25,268976,1 POOL,33,362202,5 CPT,32,361736,1 Average,24.75,284614,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $285 million. That figure was $892 million in TRMB's case. Pool Corporation (NASDAQ:POOL) is the most popular stock in this table. On the other hand ASE Technology Holding Co., Ltd. (NYSE:ASX) is the least popular one with only 9 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 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 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. A small number of hedge funds were also right about betting on TRMB as the stock returned 35.2% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.