The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards TC Energy Corporation (NYSE:TRP).
TC Energy Corporation (NYSE:TRP) was in 24 hedge funds' portfolios at the end of the first quarter of 2020. TRP investors should pay attention to an increase in hedge fund sentiment of late. There were 22 hedge funds in our database with TRP positions at the end of the previous quarter. Our calculations also showed that TRP 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_26562" align="aligncenter" width="400"] Ray Dalio of Bridgewater Associates[/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. Now we're going to take a look at the fresh hedge fund action surrounding TC Energy Corporation (NYSE:TRP).
How are hedge funds trading TC Energy Corporation (NYSE:TRP)?
Heading into the second quarter of 2020, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in TRP a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
The largest stake in TC Energy Corporation (NYSE:TRP) was held by D E Shaw, which reported holding $35.4 million worth of stock at the end of September. It was followed by Heathbridge Capital Management with a $27.2 million position. Other investors bullish on the company included Marshall Wace LLP, Balyasny Asset Management, and Bridgewater Associates. In terms of the portfolio weights assigned to each position Heathbridge Capital Management allocated the biggest weight to TC Energy Corporation (NYSE:TRP), around 7.3% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, earmarking 3.01 percent of its 13F equity portfolio to TRP.
As aggregate interest increased, key hedge funds were leading the bulls' herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the largest position in TC Energy Corporation (NYSE:TRP). Marshall Wace LLP had $26.1 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $22.4 million position during the quarter. The other funds with brand new TRP positions are Brandon Haley's Holocene Advisors, Noam Gottesman's GLG Partners, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as TC Energy Corporation (NYSE:TRP) but similarly valued. We will take a look at Humana Inc (NYSE:HUM), Truist Financial Corporation (NYSE:TFC), Relx PLC (NYSE:RELX), and Baxter International Inc. (NYSE:BAX). This group of stocks' market valuations are closest to TRP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HUM,70,4246626,-5 TFC,34,551498,-1 RELX,5,97388,-2 BAX,50,3209249,3 Average,39.75,2026190,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.75 hedge funds with bullish positions and the average amount invested in these stocks was $2026 million. That figure was $183 million in TRP's case. Humana Inc (NYSE:HUM) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 5 bullish hedge fund positions. TC Energy Corporation (NYSE:TRP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately TRP wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); TRP investors were disappointed as the stock returned 2.6% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.