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Thomson Reuters Corporation (USA) (TRI): Are Hedge Funds Right About This Stock?

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Is Thomson Reuters Corporation (USA) (NYSE:TRI) undervalued? Hedge funds are becoming less hopeful. The number of long hedge fund bets retreated by 3 lately.

To most shareholders, hedge funds are perceived as unimportant, old investment vehicles of yesteryear. While there are greater than 8000 funds trading at the moment, we at Insider Monkey choose to focus on the upper echelon of this club, about 450 funds. Most estimates calculate that this group oversees the lion’s share of the smart money’s total asset base, and by tracking their highest performing equity investments, we have brought to light a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as integral, positive insider trading sentiment is another way to parse down the stock market universe. There are lots of reasons for an executive to sell shares of his or her company, but just one, very simple reason why they would buy. Various empirical studies have demonstrated the impressive potential of this strategy if you know where to look (learn more here).

Consequently, we’re going to take a peek at the key action surrounding Thomson Reuters Corporation (USA) (NYSE:TRI).

What does the smart money think about Thomson Reuters Corporation (USA) (NYSE:TRI)?

At Q1’s end, a total of 8 of the hedge funds we track were long in this stock, a change of -27% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly.

Thomson Reuters Corporation (USA) (NYSE:TRI)According to our comprehensive database, Daniel Bubis’s Tetrem Capital Management had the largest position in Thomson Reuters Corporation (USA) (NYSE:TRI), worth close to $111.2 million, comprising 3.4% of its total 13F portfolio. Coming in second is Daniel S. Och of OZ Management, with a $16.2 million call position; 0.1% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include Jim Simons’s Renaissance Technologies, Matthew Tewksbury’s Stevens Capital Management and David Dreman’s Dreman Value Management.

Judging by the fact that Thomson Reuters Corporation (USA) (NYSE:TRI) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there were a few hedgies that elected to cut their positions entirely at the end of the first quarter. It’s worth mentioning that Steven Cohen’s SAC Capital Advisors said goodbye to the biggest investment of all the hedgies we key on, worth an estimated $0.7 million in stock.. Joel Greenblatt’s fund, Gotham Asset Management, also sold off its stock, about $0.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds at the end of the first quarter.

Insider trading activity in Thomson Reuters Corporation (USA) (NYSE:TRI)

Insider trading activity, especially when it’s bullish, is most useful when the company we’re looking at has seen transactions within the past half-year. Over the latest half-year time frame, Thomson Reuters Corporation (USA) (NYSE:TRI) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Thomson Reuters Corporation (USA) (NYSE:TRI). These stocks are Morningstar, Inc. (NASDAQ:MORN), Dun & Bradstreet Corp (NYSE:DNB), FactSet Research Systems Inc. (NYSE:FDS), IHS Inc. (NYSE:IHS), and Nielsen Hldg NV (NYSE:NLSN). This group of stocks belong to the information & delivery services industry and their market caps match TRI’s market cap.

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