World-class money managers like Bill Ackman and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on, when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Is TriNet Group Inc (NYSE:TNET) ready to rally soon? Hedge funds are getting less optimistic. The number of long hedge fund positions shrunk by 8 recently. At the end of this article we will also compare TNET to other stocks, including Ramco-Gershenson Properties Trust (NYSE:RPT), TASER International, Inc. (NASDAQ:TASR), and Gramercy Property Trust Inc (NYSE:GPT) to get a better sense of its popularity.
According to most stock holders, hedge funds are seen as slow, old investment vehicles of the past. While there are greater than 8000 funds with their doors open at present, we choose to focus on the elite of this club, around 700 funds. Most estimates calculate that this group of people commands the majority of the smart money’s total asset base, and by following their top equity investments, Insider Monkey has determined several investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Keeping this in mind, let’s view the fresh action surrounding TriNet Group Inc (NYSE:TNET).
How are hedge funds trading TriNet Group Inc (NYSE:TNET)?
Heading into the fourth quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -32% from the second quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Eric Bannasch’s Cadian Capital has the largest position in TriNet Group Inc (NYSE:TNET), worth close to $78.2 million, corresponding to 2.8% of its total 13F portfolio. The second largest stake is held by Clovis Capital Management, managed by Scott Scher & Michael Prober, which holds a $14.4 million position; the fund has 3.9% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism encompass Matthew Knauer and Mina Faltas’s Nokota Management, Jeremy Green’s Redmile Group and Ken Griffin’s Citadel Investment Group.
Seeing as TriNet Group Inc (NYSE:TNET) has experienced bearish sentiment from the smart money, it’s safe to say that there was a specific group of hedgies who were dropping their positions entirely in the third quarter. It’s worth mentioning that Chase Coleman’s Tiger Global Management LLC sold off the biggest stake of all the hedgies tracked by Insider Monkey, worth an estimated $45.6 million in shares. Ryan Pedlow’s fund, Two Creeks Capital Management, also dropped its position, valued at about $37.7 million. These transactions are intriguing to say the least, as total hedge fund interest was cut by eight funds in the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as TriNet Group Inc (NYSE:TNET) but similarly valued. These stocks are Ramco-Gershenson Properties Trust (NYSE:RPT), TASER International, Inc. (NASDAQ:TASR), Gramercy Property Trust Inc (NYSE:GPT), and Wesco Aircraft Holdings Inc (NYSE:WAIR). All of these stocks’ market caps resemble TNET’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks stood at $152 million. By comparison, hedge funds held $164 million worth TriNet Group Inc (NYSE:TNET)’s shares and the stock also had more funds holding shares than the companies from the table. This may suggest that TriNet is the best choice for a long position among all five stocks. However, a further analysis is still required in order to assess its further trajectory.