Where Do Hedge Funds Stand On TORM plc (TRMD)?
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards TORM plc (NASDAQ:TRMD).
Hedge fund interest in TORM plc (NASDAQ:TRMD) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that TRMD 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). At the end of this article we will also compare TRMD to other stocks including Community Health Systems (NYSE:CYH), IVERIC bio, Inc. (NASDAQ:ISEE), and Brigham Minerals, Inc. (NYSE:MNRL) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Howard Marks of Oaktree Capital Management
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 10 most profitable companies in the world 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 we're going to view the fresh hedge fund action regarding TORM plc (NASDAQ:TRMD).
What have hedge funds been doing with TORM plc (NASDAQ:TRMD)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 2 hedge funds held shares or bullish call options in TRMD a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Howard Marks's Oaktree Capital Management has the largest position in TORM plc (NASDAQ:TRMD), worth close to $361.4 million, comprising 7.9% of its total 13F portfolio. Coming in second is Marshall Wace LLP, led by Paul Marshall and Ian Wace, holding a $0.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Oaktree Capital Management allocated the biggest weight to TORM plc (NASDAQ:TRMD), around 7.88% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to TRMD.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now review hedge fund activity in other stocks similar to TORM plc (NASDAQ:TRMD). We will take a look at Community Health Systems (NYSE:CYH), IVERIC bio, Inc. (NASDAQ:ISEE), Brigham Minerals, Inc. (NYSE:MNRL), TrustCo Bank Corp NY (NASDAQ:TRST), Atreca, Inc. (NASDAQ:BCEL), Community Trust Bancorp, Inc. (NASDAQ:CTBI), and ScanSource, Inc. (NASDAQ:SCSC). This group of stocks' market valuations are closest to TRMD's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CYH,22,194242,4 ISEE,26,278032,-5 MNRL,19,75169,3 TRST,14,16105,1 BCEL,12,162774,3 CTBI,10,15317,2 SCSC,10,43718,-3 Average,16.1,112194,0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $112 million. That figure was $362 million in TRMD's case. IVERIC bio, Inc. (NASDAQ:ISEE) is the most popular stock in this table. On the other hand Community Trust Bancorp, Inc. (NASDAQ:CTBI) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks TORM plc (NASDAQ:TRMD) is even less popular than CTBI. Our overall hedge fund sentiment score for TRMD is 27.5. 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. 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 28.1% in 2020 through November 23rd but managed to beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on TRMD, though not to the same extent, as the stock returned 6.7% since the end of September (through November 23rd) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.