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These Hedge Funds Sold Out Of Terreno Realty Corporation (TRNO) A Bit Too Early

Nina Todic

We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds' top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Terreno Realty Corporation (NYSE:TRNO).

Is Terreno Realty Corporation (NYSE:TRNO) ready to rally soon? Money managers are in a pessimistic mood. The number of bullish hedge fund bets fell by 4 recently. Our calculations also showed that TRNO 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.

5 Most Popular Stocks Among Hedge Funds

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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Dmitry Balyasny

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, 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 go over the fresh hedge fund action surrounding Terreno Realty Corporation (NYSE:TRNO).

How are hedge funds trading Terreno Realty Corporation (NYSE:TRNO)?

At the end of the second quarter, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -31% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TRNO over the last 16 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with TRNO Positions

Among these funds, Millennium Management held the most valuable stake in Terreno Realty Corporation (NYSE:TRNO), which was worth $23.5 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $9.9 million worth of shares. Moreover, Two Sigma Advisors, Renaissance Technologies, and Balyasny Asset Management were also bullish on Terreno Realty Corporation (NYSE:TRNO), allocating a large percentage of their portfolios to this stock.

Because Terreno Realty Corporation (NYSE:TRNO) has faced falling interest from the entirety of the hedge funds we track, it's safe to say that there exists a select few hedge funds that elected to cut their positions entirely in the second quarter. At the top of the heap, Ian Simm's Impax Asset Management dumped the biggest stake of the "upper crust" of funds monitored by Insider Monkey, comprising an estimated $4.7 million in stock, and D. E. Shaw's D E Shaw was right behind this move, as the fund dumped about $4.2 million worth. These moves are important to note, as total hedge fund interest dropped by 4 funds in the second quarter.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Terreno Realty Corporation (NYSE:TRNO) but similarly valued. These stocks are ASGN Incorporated (NYSE:ASGN), Sanderson Farms, Inc. (NASDAQ:SAFM), SkyWest, Inc. (NASDAQ:SKYW), and Amicus Therapeutics, Inc. (NASDAQ:FOLD). This group of stocks' market valuations are closest to TRNO's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ASGN,21,207387,-2 SAFM,20,449367,-1 SKYW,13,197438,0 FOLD,29,1059406,-1 Average,20.75,478400,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $478 million. That figure was $48 million in TRNO's case. Amicus Therapeutics, Inc. (NASDAQ:FOLD) is the most popular stock in this table. On the other hand SkyWest, Inc. (NASDAQ:SKYW) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Terreno Realty Corporation (NYSE:TRNO) is even less popular than SKYW. 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 TRNO, though not to the same extent, as the stock returned 4.7% during the third quarter and outperformed the market as well.

Disclosure: None. This article was originally published at Insider Monkey.

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