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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 (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards TriCo Bancshares (NASDAQ:TCBK).
TriCo Bancshares (NASDAQ:TCBK) shareholders have witnessed an increase in activity from the world's largest hedge funds of late. TCBK was in 11 hedge funds' portfolios at the end of the fourth quarter of 2019. There were 10 hedge funds in our database with TCBK positions at the end of the previous quarter. Our calculations also showed that TCBK 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).
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Matthew Lindenbaum of Basswood Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader's corona catalyst trades. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a peek at the fresh hedge fund action regarding TriCo Bancshares (NASDAQ:TCBK).
Hedge fund activity in TriCo Bancshares (NASDAQ:TCBK)
Heading into the first quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in TCBK over the last 18 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in TriCo Bancshares (NASDAQ:TCBK) was held by Renaissance Technologies, which reported holding $27.1 million worth of stock at the end of September. It was followed by Millennium Management with a $6 million position. Other investors bullish on the company included Basswood Capital, AQR Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to TriCo Bancshares (NASDAQ:TCBK), around 0.59% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, earmarking 0.39 percent of its 13F equity portfolio to TCBK.
Consequently, key hedge funds have been driving this bullishness. Zebra Capital Management, managed by Roger Ibbotson, established the biggest position in TriCo Bancshares (NASDAQ:TCBK). Zebra Capital Management had $0.7 million invested in the company at the end of the quarter. Minhua Zhang's Weld Capital Management also made a $0.6 million investment in the stock during the quarter. The only other fund with a brand new TCBK position is Thomas Bailard's Bailard Inc.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as TriCo Bancshares (NASDAQ:TCBK) but similarly valued. These stocks are Patrick Industries, Inc. (NASDAQ:PATK), Silk Road Medical, Inc. (NASDAQ:SILK), So-Young International Inc. (NASDAQ:SY), and INMODE LTD. (NASDAQ:INMD). This group of stocks' market valuations are closest to TCBK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PATK,18,124804,1 SILK,12,88513,4 SY,7,61965,5 INMD,7,47683,0 Average,11,80741,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $81 million. That figure was $44 million in TCBK's case. Patrick Industries, Inc. (NASDAQ:PATK) is the most popular stock in this table. On the other hand So-Young International Inc. (NASDAQ:SY) is the least popular one with only 7 bullish hedge fund positions. TriCo Bancshares (NASDAQ:TCBK) 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 1.0% in 2020 through May 1st but beat the market by 12.9 percentage points. Unfortunately TCBK wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); TCBK investors were disappointed as the stock returned -28.3% 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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.