The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. 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 Trustmark Corporation (NASDAQ:TRMK).
Hedge fund interest in Trustmark Corporation (NASDAQ:TRMK) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Cubic Corporation (NYSE:CUB), Advanced Energy Industries, Inc. (NASDAQ:AEIS), and American Equity Investment Life Holding Company (NYSE:AEL) to gather more data points. Our calculations also showed that TRMK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
Dmitry Balyasny of Balyasny Asset Managemnet
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the recent hedge fund action surrounding Trustmark Corporation (NASDAQ:TRMK).
How have hedgies been trading Trustmark Corporation (NASDAQ:TRMK)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 11 hedge funds held shares or bullish call options in TRMK a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Arrowstreet Capital was the largest shareholder of Trustmark Corporation (NASDAQ:TRMK), with a stake worth $5.7 million reported as of the end of September. Trailing Arrowstreet Capital was Citadel Investment Group, which amassed a stake valued at $3.2 million. Two Sigma Advisors, Balyasny Asset Management, 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 ExodusPoint Capital allocated the biggest weight to Trustmark Corporation (NASDAQ:TRMK), around 0.03% of its 13F portfolio. Paloma Partners is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to TRMK.
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 go over hedge fund activity in other stocks – not necessarily in the same industry as Trustmark Corporation (NASDAQ:TRMK) but similarly valued. These stocks are Cubic Corporation (NYSE:CUB), Advanced Energy Industries, Inc. (NASDAQ:AEIS), American Equity Investment Life Holding Company (NYSE:AEL), and Applied Industrial Technologies, Inc. (NYSE:AIT). This group of stocks’ market values resemble TRMK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CUB | 16 | 34965 | -3 |
| AEIS | 17 | 121893 | 3 |
| AEL | 18 | 87521 | 1 |
| AIT | 20 | 106164 | 2 |
| Average | 17.75 | 87636 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $24 million in TRMK’s case. Applied Industrial Technologies, Inc. (NYSE:AIT) is the most popular stock in this table. On the other hand Cubic Corporation (NYSE:CUB) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Trustmark Corporation (NASDAQ:TRMK) is even less popular than CUB. Hedge funds dodged a bullet by taking a bearish stance towards TRMK. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately TRMK wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); TRMK investors were disappointed as the stock returned 1.4% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
