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 Trilogy Metals Inc. (NYSE:TMQ).
Hedge fund interest in Trilogy Metals Inc. (NYSE:TMQ) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Express, Inc. (NYSE:EXPR), Mirum Pharmaceuticals, Inc. (NASDAQ:MIRM), and LCNB Corp. (NASDAQ:LCNB) to gather more data points. Our calculations also showed that TMQ isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_25305" align="aligncenter" width="450"] John Paulson of Paulson & Co[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to review the latest hedge fund action regarding Trilogy Metals Inc. (NYSE:TMQ).
How are hedge funds trading Trilogy Metals Inc. (NYSE:TMQ)?
At Q3's end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TMQ over the last 17 quarters. With hedgies' sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in Trilogy Metals Inc. (NYSE:TMQ) was held by Paulson & Co, which reported holding $23.8 million worth of stock at the end of September. It was followed by Selz Capital with a $22.6 million position. Other investors bullish on the company included Baupost Group, Point State Capital, and DW Partners. In terms of the portfolio weights assigned to each position DW Partners allocated the biggest weight to Trilogy Metals Inc. (NYSE:TMQ), around 6.39% of its 13F portfolio. Selz Capital is also relatively very bullish on the stock, dishing out 5.68 percent of its 13F equity portfolio to TMQ.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's go over hedge fund activity in other stocks similar to Trilogy Metals Inc. (NYSE:TMQ). We will take a look at Express, Inc. (NYSE:EXPR), Mirum Pharmaceuticals, Inc. (NASDAQ:MIRM), LCNB Corp. (NASDAQ:LCNB), and Apyx Medical Corporation (NASDAQ:APYX). This group of stocks' market valuations are closest to TMQ's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EXPR,14,36867,1 MIRM,7,83998,7 LCNB,1,3680,0 APYX,8,34126,0 Average,7.5,39668,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $86 million in TMQ's case. Express, Inc. (NYSE:EXPR) is the most popular stock in this table. On the other hand LCNB Corp. (NASDAQ:LCNB) is the least popular one with only 1 bullish hedge fund positions. Trilogy Metals Inc. (NYSE:TMQ) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on TMQ, though not to the same extent, as the stock returned 8.4% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.