S&P 500 Index – Is TRI Stock A Buy or Sell?
Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Thomson Reuters Corporation (NYSE:TRI).
Is TRI stock a buy? Thomson Reuters Corporation (NYSE:TRI) has experienced an increase in hedge fund sentiment of late. Thomson Reuters Corporation (NYSE:TRI) was in 23 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 25. Our calculations also showed that TRI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 124 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Joel Greenblatt of Gotham Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. Keeping this in mind let’s analyze the new hedge fund action encompassing Thomson Reuters Corporation (NYSE:TRI).
Do Hedge Funds Think TRI Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TRI over the last 22 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.
Among these funds, Echo Street Capital Management held the most valuable stake in Thomson Reuters Corporation (NYSE:TRI), which was worth $74.4 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $57.6 million worth of shares. D E Shaw, Citadel Investment Group, and Renaissance Technologies 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 7.17% of its 13F portfolio. Lunia Capital is also relatively very bullish on the stock, setting aside 3.89 percent of its 13F equity portfolio to TRI.
As aggregate interest increased, some big names have jumped into Thomson Reuters Corporation (NYSE:TRI) headfirst. Alyeska Investment Group, managed by Anand Parekh, established the most valuable position in Thomson Reuters Corporation (NYSE:TRI). Alyeska Investment Group had $8.9 million invested in the company at the end of the quarter. Thomas Rigo’s Bishop Rock Capital also made a $4.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Joel Greenblatt’s Gotham Asset Management, Ray Dalio’s Bridgewater Associates, and Peter Muller’s PDT Partners.
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. We will take a look at Barrick Gold Corporation (NYSE:GOLD), Public Storage (NYSE:PSA), Match Group, Inc. (NASDAQ:MTCH), Rocket Companies, Inc. (NYSE:RKT), TE Connectivity Ltd. (NYSE:TEL), KLA Corporation (NASDAQ:KLAC), and Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC). This group of stocks’ market valuations resemble TRI’s market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GOLD,53,1751874,1 PSA,31,1038430,14 MTCH,72,3780895,11 RKT,16,222897,-6 TEL,39,2164724,6 KLAC,36,925910,3 ERIC,20,210745,-3 Average,38.1,1442211,3.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.1 hedge funds with bullish positions and the average amount invested in these stocks was $1442 million. That figure was $361 million in TRI’s case. Match Group, Inc. (NASDAQ:MTCH) is the most popular stock in this table. On the other hand Rocket Companies, Inc. (NYSE:RKT) is the least popular one with only 16 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. Our overall hedge fund sentiment score for TRI is 42.9. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on TRI as the stock returned 12.8% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.