Is TransUnion (TRU) A Good Stock To Buy?

At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

TransUnion (NYSE:TRU) has experienced an increase in activity from the world’s largest hedge funds in recent months. TRU was in 28 hedge funds’ portfolios at the end of the third quarter of 2016. There were 21 hedge funds in our database with TRU holdings at the end of the previous quarter. 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 Kinross Gold Corporation (USA) (NYSE:KGC), Jacobs Engineering Group Inc (NYSE:JEC), and The Ultimate Software Group, Inc. (NASDAQ:ULTI) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What does the smart money think about TransUnion (NYSE:TRU)?

At Q3’s end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 33% rise from the second quarter of 2016. Hedge fund ownership of the stock has more than doubled over the past three quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, John Griffin’s Blue Ridge Capital has the most valuable position in TransUnion (NYSE:TRU), worth close to $90.4 million, comprising 1.1% of its total 13F portfolio. The second largest stake is held by Junto Capital Management, managed by James Parsons, which holds a $65.3 million position; the fund has 8.6% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions consist of Ken Griffin’s Citadel Investment Group, Benjamin A. Smith’s Laurion Capital Management, and D E Shaw.

With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Laurion Capital Management initiated the largest position in TransUnion (NYSE:TRU). Laurion Capital Management had $43.9 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $21.9 million position during the quarter. The following funds were also among the new TRU investors: Jonathon Jacobson’s Highfields Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Clint Carlson’s Carlson Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as TransUnion (NYSE:TRU) but similarly valued. We will take a look at Kinross Gold Corporation (USA) (NYSE:KGC), Jacobs Engineering Group Inc (NYSE:JEC), The Ultimate Software Group, Inc. (NASDAQ:ULTI), and Apollo Global Management LLC (NYSE:APO). This group of stocks’ market valuations resemble TRU’s market valuation.

As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $302 million. That figure was $534 million in TRU’s case. Kinross Gold Corporation (USA) (NYSE:KGC) is the most popular stock in this table. On the other hand Jacobs Engineering Group Inc (NYSE:JEC) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks TransUnion (NYSE:TRU) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None