"Market conditions are changing. The continued rise in interest rates suggests we are in the early stages of a bond bear market, which could intensify as central banks withdraw liquidity. The receding tide of liquidity will start to reveal more rocks beyond what has been exposed in emerging markets so far, and the value of a value discipline will be in avoiding the biggest capital-destroying rocks. If a rock emerges on the crowded shore of U.S. momentum, it could result in a major liquidity challenge, as momentum is often most intense on the downside as a crowded trade reverses. So investors are facing a large potential trade-off right now: continue to bet on the current dominance of momentum and the S&P 500, or bet on change and take an active value bet in names with attractive value and optionality, but with negative momentum," said Clearbridge Investments in its market commentary. We aren't sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Trupanion Inc (NASDAQ:TRUP).
Is Trupanion Inc (NASDAQ:TRUP) a bargain? The best stock pickers are in an optimistic mood. The number of long hedge fund positions rose by 1 in recent months. Our calculations also showed that trup isn't among the 30 most popular stocks among hedge funds. TRUP was in 10 hedge funds' portfolios at the end of December. There were 9 hedge funds in our database with TRUP positions at the end of the previous quarter.
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 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 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.
We're going to view the new hedge fund action encompassing Trupanion Inc (NASDAQ:TRUP).
What does the smart money think about Trupanion Inc (NASDAQ:TRUP)?
At the end of the fourth quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the second quarter of 2018. By comparison, 8 hedge funds held shares or bullish call options in TRUP a year ago. 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 Trupanion Inc (NASDAQ:TRUP) was held by Nine Ten Partners, which reported holding $76.9 million worth of stock at the end of December. It was followed by StackLine Partners with a $16.3 million position. Other investors bullish on the company included Greenlea Lane Capital, Royce & Associates, and Millennium Management.
As industrywide interest jumped, specific money managers were breaking ground themselves. StackLine Partners, managed by Brian Gootzeit and Andrew Frank, initiated the most valuable position in Trupanion Inc (NASDAQ:TRUP). StackLine Partners had $16.3 million invested in the company at the end of the quarter. Josh Tarasoff's Greenlea Lane Capital also made a $12.6 million investment in the stock during the quarter. The only other fund with a new position in the stock is Paul Tudor Jones's Tudor Investment Corp.
Let's now review hedge fund activity in other stocks similar to Trupanion Inc (NASDAQ:TRUP). We will take a look at COMSCORE, Inc. (NASDAQ:SCOR), Gran Tierra Energy Inc. (NYSE:GTE), Athenex, Inc. (NASDAQ:ATNX), and Interface, Inc. (NASDAQ:TILE). This group of stocks' market caps are similar to TRUP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SCOR,12,190216,-1 GTE,16,249835,0 ATNX,10,67768,3 TILE,16,59233,-1 Average,13.5,141763,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $131 million in TRUP's case. Gran Tierra Energy Inc. (NYSE:GTE) is the most popular stock in this table. On the other hand Athenex, Inc. (NASDAQ:ATNX) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Trupanion Inc (NASDAQ:TRUP) is even less popular than ATNX. Hedge funds clearly dropped the ball on TRUP as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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. A small number of hedge funds were also right about betting on TRUP as the stock returned 29.1% and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.