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In this article we will check out the progression of hedge fund sentiment towards Thomson Reuters Corporation (NYSE:TRI) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Thomson Reuters Corporation (NYSE:TRI) was in 22 hedge funds' portfolios at the end of March. TRI investors should pay attention to an increase in enthusiasm from smart money lately. There were 21 hedge funds in our database with TRI positions at the end of the previous quarter. Our calculations also showed that TRI 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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Sander Gerber of Hudson Bay Capital[/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 let's take a look at the fresh hedge fund action surrounding Thomson Reuters Corporation (NYSE:TRI).
How are hedge funds trading Thomson Reuters Corporation (NYSE:TRI)?
Heading into the second quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TRI over the last 18 quarters. With hedge funds' sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of Thomson Reuters Corporation (NYSE:TRI), with a stake worth $115.4 million reported as of the end of September. Trailing Citadel Investment Group was Samlyn Capital, which amassed a stake valued at $50 million. D E Shaw, Strycker View Capital, and Echo Street Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Strycker View Capital allocated the biggest weight to Thomson Reuters Corporation (NYSE:TRI), around 22.74% of its 13F portfolio. Lunia Capital is also relatively very bullish on the stock, setting aside 3.42 percent of its 13F equity portfolio to TRI.
Now, specific money managers were leading the bulls' herd. Echo Street Capital Management, managed by Greg Poole, established the most valuable position in Thomson Reuters Corporation (NYSE:TRI). Echo Street Capital Management had $20.6 million invested in the company at the end of the quarter. Peter Seuss's Prana Capital Management also initiated a $3.9 million position during the quarter. The other funds with new positions in the stock are David Rodriguez-Fraile's BlueMar Capital Management, Ronald Hua's Qtron Investments, and John Overdeck and David Siegel's Two Sigma Advisors.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Thomson Reuters Corporation (NYSE:TRI) but similarly valued. These stocks are UBS Group AG (NYSE:UBS), ConocoPhillips (NYSE:COP), Roper Technologies Inc. (NYSE:ROP), and Sempra Energy (NYSE:SRE). All of these stocks' market caps match TRI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UBS,15,211262,1 COP,54,961915,-8 ROP,38,1015909,-2 SRE,27,505194,-8 Average,33.5,673570,-4.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.5 hedge funds with bullish positions and the average amount invested in these stocks was $674 million. That figure was $330 million in TRI's case. ConocoPhillips (NYSE:COP) is the most popular stock in this table. On the other hand UBS Group AG (NYSE:UBS) is the least popular one with only 15 bullish hedge fund positions. Thomson Reuters Corporation (NYSE:TRI) 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 TRI wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); TRI investors were disappointed as the stock returned 4% 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.