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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Trilogy Metals Inc. (NYSE:TMQ) based on those filings.
Is TMQ a good stock to buy now? Hedge funds were taking an optimistic view. The number of long hedge fund positions advanced by 2 lately. Trilogy Metals Inc. (NYSE:TMQ) was in 9 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 14. 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 for a quick look at the top 5 stocks). There were 7 hedge funds in our database with TMQ holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Mark Kingdon of Kingdon Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let's analyze the latest hedge fund action regarding Trilogy Metals Inc. (NYSE:TMQ).
Do Hedge Funds Think TMQ Is A Good Stock To Buy Now?
At third quarter's end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in TMQ a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Paulson & Co was the largest shareholder of Trilogy Metals Inc. (NYSE:TMQ), with a stake worth $25.6 million reported as of the end of September. Trailing Paulson & Co was Baupost Group, which amassed a stake valued at $21.8 million. Point State Capital, Kingdon Capital, and Sprott Asset 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 Paulson & Co allocated the biggest weight to Trilogy Metals Inc. (NYSE:TMQ), around 0.8% of its 13F portfolio. Kingdon Capital is also relatively very bullish on the stock, setting aside 0.31 percent of its 13F equity portfolio to TMQ.
Now, some big names were breaking ground themselves. Renaissance Technologies, founded by Jim Simons, established the biggest position in Trilogy Metals Inc. (NYSE:TMQ). Renaissance Technologies had $0.5 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0 million investment in the stock during the quarter.
Let's also examine hedge fund activity in other stocks similar to Trilogy Metals Inc. (NYSE:TMQ). We will take a look at CalAmp Corp. (NASDAQ:CAMP), Hanmi Financial Corp (NASDAQ:HAFC), CNB Financial Corporation (NASDAQ:CCNE), Aspen Group Inc. (NASDAQ:ASPU), AXT Inc (NASDAQ:AXTI), Northern Oil & Gas, Inc. (NYSE:NOG), and Enterprise Bancorp, Inc (NASDAQ:EBTC). This group of stocks' market caps resemble TMQ's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CAMP,11,190360,-2 HAFC,12,14090,0 CCNE,8,10648,2 ASPU,9,33426,-1 AXTI,8,15855,-4 NOG,12,29194,-10 EBTC,2,955,1 Average,8.9,42075,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.9 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $56 million in TMQ's case. Hanmi Financial Corp (NASDAQ:HAFC) is the most popular stock in this table. On the other hand Enterprise Bancorp, Inc (NASDAQ:EBTC) is the least popular one with only 2 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 overall hedge fund sentiment score for TMQ is 61.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and beat the market again by 16.2 percentage points. Unfortunately TMQ wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TMQ were disappointed as the stock returned 4.5% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.