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. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31 holdings, data that is available nowhere else. Should you consider Tejon Ranch Company (NYSE:TRC) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is Tejon Ranch Company (NYSE:TRC) a buy here? Hedge funds are taking an optimistic view. The number of long hedge fund bets inched up by 2 recently. Our calculations also showed that TRC isn't among the 30 most popular stocks among hedge funds.
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 market by 32 percentage points since May 2014 through March 12, 2019 (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.
Let's take a look at the key hedge fund action regarding Tejon Ranch Company (NYSE:TRC).
What have hedge funds been doing with Tejon Ranch Company (NYSE:TRC)?
At Q4's end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards TRC over the last 14 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce's Royce & Associates has the most valuable position in Tejon Ranch Company (NYSE:TRC), worth close to $26.3 million, comprising 0.2% of its total 13F portfolio. The second largest stake is held by Third Avenue Management, managed by Martin Whitman, which holds a $18.5 million position; 1.5% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish comprise John W. Rogers's Ariel Investments, Mario Gabelli's GAMCO Investors and Michael Price's MFP Investors.
As industrywide interest jumped, key money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, created the largest position in Tejon Ranch Company (NYSE:TRC). Millennium Management had $0.6 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle's Springbok Capital also made a $0 million investment in the stock during the quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Tejon Ranch Company (NYSE:TRC) but similarly valued. We will take a look at REX American Resources Corp (NYSE:REX), Flexion Therapeutics Inc (NASDAQ:FLXN), Antares Pharma Inc (NASDAQ:ATRS), and Yintech Investment Holdings Limited (NASDAQ:YIN). This group of stocks' market caps are closest to TRC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position REX,7,37319,1 FLXN,14,51371,-1 ATRS,10,46034,1 YIN,2,365,1 Average,8.25,33772,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $80 million in TRC's case. Flexion Therapeutics Inc (NASDAQ:FLXN) is the most popular stock in this table. On the other hand Yintech Investment Holdings Limited (NASDAQ:YIN) is the least popular one with only 2 bullish hedge fund positions. Tejon Ranch Company (NYSE:TRC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately TRC wasn't nearly as popular as these 15 stock and hedge funds that were betting on TRC were disappointed as the stock returned 3.9% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.