Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find write-ups about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Thomson Reuters Corporation (NYSE:TRI) based on that data.
Thomson Reuters Corporation (NYSE:TRI) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 17 hedge funds' portfolios at the end of June. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as TE Connectivity Ltd. (NYSE:TEL), Carnival plc (NYSE:CUK), and LyondellBasell Industries NV (NYSE:LYB) to gather more data points. Our calculations also showed that TRI 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.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, 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 take a look at the key hedge fund action surrounding Thomson Reuters Corporation (NYSE:TRI).
How are hedge funds trading Thomson Reuters Corporation (NYSE:TRI)?
Heading into the third quarter of 2019, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the first quarter of 2019. By comparison, 14 hedge funds held shares or bullish call options in TRI a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Thomson Reuters Corporation (NYSE:TRI) was held by Arrowstreet Capital, which reported holding $65.4 million worth of stock at the end of March. It was followed by Millennium Management with a $53.6 million position. Other investors bullish on the company included Samlyn Capital, GLG Partners, and D E Shaw.
Because Thomson Reuters Corporation (NYSE:TRI) has experienced falling interest from the smart money, logic holds that there exists a select few hedgies that elected to cut their positions entirely by the end of the second quarter. Intriguingly, Cliff Asness's AQR Capital Management sold off the largest position of the "upper crust" of funds tracked by Insider Monkey, valued at about $24.5 million in stock. Jeffrey Talpins's fund, Element Capital Management, also dumped its stock, about $2 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Thomson Reuters Corporation (NYSE:TRI) but similarly valued. These stocks are TE Connectivity Ltd. (NYSE:TEL), Carnival Corporation & Plc (NYSE:CUK), LyondellBasell Industries NV (NYSE:LYB), and Atlassian Corporation Plc (NASDAQ:TEAM). This group of stocks' market caps resemble TRI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TEL,27,1350859,1 CUK,10,121231,2 LYB,45,2065988,9 TEAM,36,1996530,0 Average,29.5,1383652,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.5 hedge funds with bullish positions and the average amount invested in these stocks was $1384 million. That figure was $316 million in TRI's case. LyondellBasell Industries NV (NYSE:LYB) is the most popular stock in this table. On the other hand Carnival Corporation & Plc (NYSE:CUK) is the least popular one with only 10 bullish hedge fund positions. Thomson Reuters Corporation (NYSE:TRI) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on TRI, though not to the same extent, as the stock returned 4.3% during the third quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.