We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Trimble Inc. (NASDAQ:TRMB).
Trimble Inc. (NASDAQ:TRMB) was in 30 hedge funds' portfolios at the end of the fourth quarter of 2019. TRMB investors should pay attention to an increase in hedge fund interest in recent months. There were 28 hedge funds in our database with TRMB positions 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 Q4 rankings and see the video at the end of this article for Q3 rankings).
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 41 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 35.3% through March 3rd. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_221556" align="aligncenter" width="399"] Richard Driehaus of Driehaus Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. With all of this in mind we're going to go over the new hedge fund action encompassing Trimble Inc. (NASDAQ:TRMB).
What have hedge funds been doing with Trimble Inc. (NASDAQ:TRMB)?
At Q4's end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TRMB over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Impax Asset Management, managed by Ian Simm, holds the largest position in Trimble Inc. (NASDAQ:TRMB). Impax Asset Management has a $304.2 million position in the stock, comprising 3.4% of its 13F portfolio. The second most bullish fund manager is Select Equity Group, managed by Robert Joseph Caruso, which holds a $196 million position; 1.2% of its 13F portfolio is allocated to the company. Other professional money managers with similar optimism comprise D. E. Shaw's D E Shaw, Mikal Patel's Oribel Capital Management and Avi Fruchter's Anavon Capital. In terms of the portfolio weights assigned to each position Anavon Capital allocated the biggest weight to Trimble Inc. (NASDAQ:TRMB), around 6.14% of its 13F portfolio. Impax Asset Management is also relatively very bullish on the stock, designating 3.39 percent of its 13F equity portfolio to TRMB.
Now, some big names have been driving this bullishness. Oribel Capital Management, managed by Mikal Patel, assembled the most outsized position in Trimble Inc. (NASDAQ:TRMB). Oribel Capital Management had $16.2 million invested in the company at the end of the quarter. Avi Fruchter's Anavon Capital also initiated a $6.4 million position during the quarter. The other funds with brand new TRMB positions are Jim O'Brien and Jonathan Dorfman's Napier Park Global Capital, Renaissance Technologies, and Richard Driehaus's Driehaus Capital.
Let's now take a look at hedge fund activity in other stocks similar to Trimble Inc. (NASDAQ:TRMB). We will take a look at CF Industries Holdings, Inc. (NYSE:CF), Avantor, Inc. (NYSE:AVTR), Mylan N.V. (NASDAQ:MYL), and Comerica Incorporated (NYSE:CMA). 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 CF,41,1003526,-1 AVTR,28,833100,1 MYL,47,1849229,12 CMA,36,542380,4 Average,38,1057059,4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $1057 million. That figure was $649 million in TRMB's case. Mylan N.V. (NASDAQ:MYL) is the most popular stock in this table. On the other hand Avantor, Inc. (NYSE:AVTR) is the least popular one with only 28 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. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately TRMB wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TRMB investors were disappointed as the stock returned -41.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.